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16 November 2020
Business interruption policy time limits are more likely to be reached as the COVID-19 outbreak causes delays to repair and construction works at major commercial sites after loss-causing events, Axa XL has warned.
Commercial property policies, including those covering downstream energy and power generation, usually include a time-limited maximum indemnity period.
“In today’s world where so much remains uncertain, the estimates and assumptions clients use to set the length of an indemnity period may no longer apply,” Head of Property, Construction and Energy Asia Pacific Todd Wilhelm says in an article on the insurer’s website.
“Thus, clients may want to reconsider this aspect of their property policies.”
Mr Welhelm says equal weight should be given both to the amount of business interruption to insure and the time needed to return to regular operation.
Factory shutdowns, supply chain disruptions, shipping delays and slow customs processing are among issues that may cause projects to take longer than expected.
“Longer repair/reconstruction periods and, by implication, more extended indemnity periods, also could have repercussions for insurers, especially in terms of their risk appetites and the limits and deductibles they can offer,” he says.