More than three million customers across the Northeast lost power last weekend as wind and heavy snow uprooted some trees and sheared branches off others, snapping power lines as they fell. Connecticut Light and Power is still struggling to get service restored to hundreds of thousands of residents and business owners.

The New York Times reported this weekend that:

Russell Hunter, who owns Pfau’s Hardware in West Hartford, said that after a bizarre fall snowstorm knocked out power to nearly one million people in his state and millions more throughout the Northeast last weekend, his store was cleaned out of all storm-related supplies. They went at about five times the normal rate of sale, with everything from batteries to oil lamps to gas grills flying out the door as fast as he could order them.

While Mr. Hunter may have increased sales as a result of the snowstorm, not many other businesses are enjoying the same luck. Retail and service related enterprises are probably bleeding to death as they wait for the slow recovery.

Power outages are common following major weather events. Loss of income and other damage may be caused by off-site damage, similar to the power outage experienced by the businesses in Connecticut. For such situations, it is important to have off-site power outage coverage endorsed to the policy. When there is no direct damage to covered property, but damage to property of others results in a loss of power, most commercial property insurance policies will not provide for loss of income and other losses by definition. Off-premises damage resulting in loss of power is generally added as an endorsement.

For example, Utility Service Interruption Coverage generally provides:

We will pay for loss of or damage to Covered Property described in the Schedule, caused by an interruption in utility service to the described premises. The interruption in utility service must result from direct physical loss or damage by a Covered Cause of Loss (as indicated in the Schedule) to the property described in Paragraph C. if such property is indicated by an ‘‘X’’ in the Schedule and is located off the described premises.

The loss still needs to be caused by a covered peril, but this endorsement adds coverage otherwise excluded. Some business interruption forms are more restrictive and eliminate coverage for income losses if the failure occurs ‘‘outside of a covered building,’’ rather than loss of power on premises.

Restaurants, food stores and food brokers should also purchase Spoilage Coverage. This provides for losses caused by power outages on or off premises with the following language:

Power Outage, meaning change in temperature or humidity resulting from complete or partial interruption of electrical power, either on or off the described premises, due to conditions beyond your control.

Power outage is a common and significant threat to businesses. Prudent risk management requires power back-up systems as well as proper insurance coverage for these disasters. Otherwise, a second financial disaster will likely occur.