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Wildfire smoke is exposing business interruption coverage gaps
Risk advisor Rob Hoover says smoke can disable HVAC and air filtration, creating business interruption losses even when there is no structural damage.
Wildfire smoke has emerged as a nationwide business continuity risk, including for companies far from the fire line, as poor air quality alerts push customers indoors and can force outdoor work stoppages, according to Insurance Business.
The outlet reports that the operational disruption can start with HVAC and air handling systems, since fine particulate matter is classified by the EPA, with PM2.5 levels above 150 considered unhealthy for the general public, and smoke can clog air filters, strain equipment, and lead to shutdowns even without flames.
Smoke can also settle into fabric, inventory, and building materials after conditions improve outside, and Insurance Business notes that some companies only learn the full scope of damage when a claim is already underway.
Insurance Business adds that Hoover’s team handled a seven-figure claim after exhaust smoke entered a luxury apartment building, where there was no fire and no structural damage, but remediation was still extensive and costly, with potential revenue losses if businesses choose to stay open despite reduced foot traffic.