Insurance Coverage For The Economic Aftershocks Of Recent Japanese Earthquakes
Recent major earthquakes in Japan create, once again, the prospect of a natural disaster abroad having serious economic repercussions in the United States in the weeks and months to come. Damage to Japanese manufacturing facilities, roads and railroads could result in unfilled orders for products and component parts, leaving American companies to scramble to find alternate suppliers, and to pay higher prices. Other companies could lose access to accounts in Japan. The earthquake in Ecuador, taking a more severe human toll, will have far less economic impact but will still affect some U.S. and global companies.
Many companies have insurance coverage for their lost profits resulting from such disasters, even when there is no damage to their own property. This coverage is called contingent business interruption and contingent extra expense insurance, and is commonly included in commercial property policies. These types of insurance can be very valuable in times like these, but the coverage is narrowly defined and may be subject to sublimits.