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January 2006 |  |
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The Insurance Professional
How Waiting Periods Trigger Coverage
The term waiting period can have different meanings depending on how it is used in the specific policy form. In some instances, it acts as a qualifier for a specific coverage to apply. In others it describes a deductible expressed as a period of time, for example a 12 hour deductible for business income coverage.
TIME IS THE KEY
HSB Freestyle® monoline coverage and most standard industry equipment breakdown policies use a waiting period to determine whether specific coverage applies, rather than as a deductible. Once the waiting period is met, all other terms of the policy including deductibles will apply.
WHEN IT STARTS
For example, when a 24 hour waiting period is indicated in HSB Freestyle®, it means there is no Service Interruption coverage available until the disruption of service exceeds 24 hours. The waiting period also applies to spoilage of Perishable Goods resulting from an interruption of service. If the service is interrupted for more than 24 hours, coverage is available, subject to all other policy terms including the deductible.
IS THIS COVERED?
Which of the following would trigger payment under an HSB Freestyle® policy with a 24 hour waiting period?
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A gas station has to close down when it loses electrical service for
eight hours due to a short in the utility's overhead power line.
No. The interruption of electrical service lasted only eight hours.
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A restaurant loses the food in its refrigerator due to spoilage when
it loses electrical service for 30 hours because of a breakdown at a
local utility substation.
Yes. Coverage would be triggered, and all other policy terms apply including the deductible, provided Perishable Goods coverage is included.
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A book store reports a drop in business after its Web site is
disabled for 26 hours due to a mechanical breakdown at the store's
Internet service provider.
Yes. All other policy terms apply, including the deductible.
