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Preparing for contingent time element claims after highly disruptive storms

Hurricane Milton made landfall in Florida as an extremely dangerous Category 3 storm, following on from Hurricane Helene’s landfall as a devastating Category 4 storm two weeks earlier. Both brought catastrophic winds, flooding, and storm surge to Florida and the southeast region, resulting in significant impacts to people, property, power and water services, and supply chains.

10/15/2024

Hurricane Milton made landfall in Florida as an extremely dangerous Category 3 storm, following on from Hurricane Helene’s landfall as a devastating Category 4 storm two weeks earlier. Both brought catastrophic winds, flooding, and storm surge to Florida and the southeast region, resulting in significant impacts to people, property, power and water services, and supply chains.

Businesses’ first priority should be to focus on their people, who may have experienced personal losses. It also is critical to avoid putting anyone, whether your own employees or others assisting with your claim, in unnecessary danger as you start collecting information about damages and business losses.

Supply chain issues could prolong your business’s recovery

As companies assess the extent of damage to their properties and restart their operations, many have encountered service interruption issues and access challenges. Further, strained supply chains in the region following two storms may make obtaining critical repair and rebuilding supplies or raw materials difficult and more expensive, hindering the ability to conduct normal business operations and serve customers.

Even companies that did not experience physical damage could have their post-storm operations disrupted due to supply chain issues. Critical suppliers, or their suppliers, could have experienced damage or have their operations interrupted. For example, Hurricane Helene caused extensive damage to facilities that produce IV fluids used nationwide by hospitals and disrupted production at quartz mines that supply raw materials to the semiconductor and solar panel industries, while Hurricane Milton caused gas shortages that only recently have been alleviated and damaged orange crops at a time of tight global supply. Logistics services providers, such as shippers and ports, also could experience delays due to shutdowns and backlogs. In addition, customers’ ability to receive goods or services may have been impacted.

It is important to work with your insurance broker or risk management advisor to carefully review your policy documents to determine whether you might have a basis for filing a contingent time element claim based on the supply chain issues that your organization may be facing. This includes understanding:

  • Is contingent time element coverage provided in your policy?
  • What are the limits/sublimits for this coverage?
  • What is the applicable deductible/self-insured retention?
  • Is coverage available only for named customers or suppliers, direct customers or suppliers, or second/other tiers?
  • Does coverage for all perils and extensions of coverage apply to contingent time element losses?
  • Are there any other restrictions or limitations that might apply to contingent time element coverage?

3 actions to prepare for potential contingent time element claims

Contingent time element claims — where you are affected by the impact of the storm on third parties — can be among the more complex claims to file and manage. Having a good understanding of your potential loss and coverage, as well as established communication protocols with your insurance broker and your insurer’s claims adjustment teams, and the right claims advocacy team representing you are important in helping your claim process move forward smoothly and enabling your business to return to normal operations.

The following three critical actions can help you reduce the potential for financial impacts on your business and prepare for a possible contingent time element claim:

  1. Assess and document the specific nature of the damage and the cause of impact on your customers’ and/or suppliers’ operations, as well as the expected duration of the interruption (period of restoration).
  2. Explore how much inventory is in your supply chain, as the effects of the loss may not appear immediately and as customers and/or suppliers may return to operations at reduced capacity, with customers like yourself on strict allocations (for example, the current IV fluids situation).
  3. Investigate if alternate suppliers are available to minimize the disruption to your operations.

In addition to contingent time element exposures, the storms could also generate interdependency losses if damage to one of your locations impacts the ability of other locations to conduct normal business operations. These types of exposures should be explored prior to and immediately after a loss.

For assistance with your potential contingent time element claims and any other claims resulting from the recent hurricanes, please reach out to your Marsh client team and claims advocate.

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