Pacific Gas & Electric, the largest utility in the state of California and Southern California Edison have announced they will be cutting power as a safety precaution in response to the potential for catastrophic wildfires. This risk of fire is being caused by the threat of extreme winds and low humidity that may down power lines and spark fires. The preventative shut-off could impact up to 900,000 customers for two days as reported by CNN. (Source: 

Businesses and risk managers need to take steps now to plan to recover potential loss and business interruption. In addition, all companies or organizations that risk potential loss should consider their potential insurance coverage available for this type of loss. 

We asked four industry experts how businesses can respond and recover from losses incurred as a result of the planned California Power Outages. 

  • Dina Senerchia, Vice President, Procor Solutions “Regardless of coverage, businesses should be tracking their incremental costs and lost sales as a result of the power outages and take all reasonable measures to mitigate the impact of the event.  In addition, businesses should identify temporary measures needed to resume operations and the associated extraordinary expenses incurred.  And of course, engage with your claims team, broker, claims preparer and coverage council as soon as possible”.   
  • Greg Podolak, Managing Partner, Saxe Doernberger & Vita, P.C.  “Proactive, thorough analysis of the policy and law is essential to a successful claim recovery.  There are many variations on power loss/business interruption endorsements, some specifically dependent on physical injury and some not.  Even in situations where “direct physical loss” is a factor, certain courts recognize that a loss of functionality – that is, the mere inability of equipment to operate as intended and provide electricity – can qualify.”  
  • Maryann Johnson, Managing Director, Property & Energy Claims, Beecher Carlson Insurance Services, LLC  “As advocates for our clients, we would consider the facts and impact to their operation and undertake a review of the policy to determine if there is an avenue of coverage.   A straightforward trigger for coverage under a first party property policy with business interruption coverage would be an event of physical damage, not otherwise excluded, to covered property.  A planned and voluntary Public Safety Power Shutoff is likely not an event of physical damage in and of itself.  However, the impact on a client and their specific policy and additional coverages may lend itself to coverage.” 
  • Blake Berscheid, Assistant Vice President, Senior Property Claims Director at Hays Companies “Generally, for coverage to be afforded under a first party property policy, there must be physical loss or damage, from a covered cause of loss, at the “facilities” of the utility company.  Some forms require that the loss or damage occur to property of the type insured by the policy.  Other forms take a broader view and only require an “accidental event” at the “facilities of the supplier”.  Given that the power outages are intentional, it seems unlikely that coverage would apply to business interruption losses exclusively from the blackout. However, abrupt fluctuations of power can cause damage to electrical controls and equipment.  If damage occurs to property at a client’s location which is a result of the power outage, coverage may apply.  It would also be worth monitoring any unexpected damage which occurs to the utility’s facilities as a result of blackout.  If the outage lasts longer than initially anticipated due to damage at the utility’s facilities, then coverage may be afforded for that time period. We always encourage clients to mutually review their specific policy language with their brokerage team to determine if coverage may apply.” 

To learn more and connect with Procor regarding the California Planned Power Outages contact Dina Senerchia at