Are businesses covered for a telecom’s “maintenance oops”?

Despite Interac payment systems and phone lines being down, most businesses will not have insurance coverage for any type of income loss as a result of the national Rogers outage on Friday, says one insurance expert.  

The outage, which affected mobile and internet users, was reportedly caused by a maintenance update. The outage prevented calls, including 911 service in some cities, and immobilized ATMs and Interac payment systems for more than 15 hours.  

“Standard insurance business interruption policy is triggered by damage caused by an insured peril. So, think of a fire or an explosion or wind damage that causes your business not to be able to function,” says Rob de Pruis, national director of consumer and industry relations at Insurance Bureau of Canada. “An outage itself, there is no physical damage to the property. So commonly, there wouldn’t be any type of trigger.” 

However, some policies may include a service interruption endorsement, which covers damage to property, losses in income, and extra expenses incurred in the event of a utility failure. 

But de Pruis says these endorsements are often very specific. “If it sounds like this was more of a ‘maintenance oops,’ as opposed to damage to the utility infrastructure, then it may not be the right trigger to enact that specific endorsement, either. 

“The bottom line: most businesses will not have insurance coverage for any type of income loss as a result of this outage.” 

One thing for businesses to keep in mind is whether they actually had business income loss, or just a delay in income, de Pruis says.  

“This outage in many areas was [for] a fairly short period of time,” he says. “So, if you have specific products or services, it’s not like your customers can go across the street to get these same products and services, because the outage was pretty widespread. If you were up and running the following day, you might still be getting that business, it just might be a day or two later for some people. 

“Take a look at your business. Just because you weren’t able to do transactions that day, many of these customers would likely be coming back in subsequent days.”   

One adjusting firm, Crawford and Company Canada, says it has yet to see any business interruption claims arising from the outage.  

“We can confirm that we have not seen any business interruption claims yet; we suspect that it is just too early. It will be interesting to see whether there are business interruption policy wordings that will respond to the outages and the subsequent lost productivity and revenue,” Heather Matthews, chief client officer, said in an email to Canadian Underwriter. 

This outage provides another reason why businesses need to develop a comprehensive risk management strategy, says de Pruis.  

“[Businesses] really need to understand all of the risks that their business could be faced with, understand what options are available to provide coverage, and then make an educated informed decision on what that insurance purchase looks like…It is an important element to make sure that you’re protecting your business and to make sure that you’re able to continue your operations.”  

 

A Rogers wireless store in Toronto amid a country wide outage of the telecommunication company’s services, Friday, July 8, 2022. THE CANADIAN PRESS/Cole Burston