Modest Insurance Cost From Blackout Expected

Impact from the blackout that hit the northeastern U.S. and parts of Ontario from Windsor to Ottawa should not be significant, insurance sources on both sides of the border say. The lights went out in Ontario just after 4:00 pm on August 14, with a record 50 million people affected in total.

Commercial coverage for losses as a result of a power outage is “extremely limited”, says Mark Yakabuski, Ontario region vice president at the Insurance Bureau of Canada (IBC). Commercial insureds would have to have special wording regarding business interruption coverage as a result of power outage.

Homeowners may have some coverage for spoilage of frozen food, although this may be subject to deductibles higher than losses. Crawford Adjusters Canada CEO Glenn Gibson says his firm received few claims following the blackout. Some homes experienced fires, often as a result of using candles for lighting, which would generally be covered as an “accidental act”.

According to the U.S.-based Insurance Information Institute (III), losses south of the border should be “modest” owing to the same commercial exclusions and homeowners’ policy deductibles. The III notes that the blackout that hit New York in 1977, which lasted two days, caused just US$2 million in insured losses.