Introduction

Hotels, resorts, and venues depend on external utilities to operate rooms, kitchens, point‑of‑sale, elevators, HVAC, and event AV. When a covered event damages utility company property away from your site and causes an outage, revenue can stop even though your building is undamaged. Utility Services Time‑Element (often called Off‑Premises Power) is the business income/extra expense extension designed for that gap. This page explains what it is, how it is usually structured for hospitality risks in Canada, and how it interacts with your Business Interruption (BI) coverage.

What “Utility Services Time‑Element” means

Purpose: Extends Business Interruption and Extra Expense to loss caused by an interruption of utilities that originates off your premises.
Scope: Typically applies to one or more of the following services when provided by an external supplier: electrical power, water, steam, sewer, and communications/data.
Trigger concept: The outage must result from direct physical loss or damage to the utility provider’s property by a peril insured under your property policy. Planned load shedding, voluntary shutdowns, or outages not caused by covered physical damage are generally not triggers.
Time‑Element focus: This extension covers lost income and necessary extra expense, not the direct physical damage to your own property. For direct spoilage or equipment damage, other endorsements may be needed (e.g., equipment breakdown or spoilage).

For foundational background on Business Interruption and how indemnity works, see Business Interruption Insurance. For core property causes of loss and exclusions, see Commercial Property Insurance.

What it typically includes for hotels and venues

Lost room revenue and ancillary income (F&B, spa, parking) arising from a covered utility outage.
Extra expense to minimize shutdown (e.g., temporary generators, potable water, communications workarounds) when economical.
Event‑related costs for venues (e.g., relocating or rescheduling functions) when they qualify as extra expense under the policy.
Alignment with hospitality needs detailed in Hotel Insurance and broader Hospitality Insurance.

Typical policy mechanics (how it’s set in practice)

Hospitality policies commonly add Utility Services Time‑Element by endorsement. Key levers you will see on declarations and forms:

Covered utilities: Often listed separately (power, water, communications). You may select some or all.
Sublimit: A separate limit for this extension, distinct from your overall BI limit.
Waiting period: A time‑based deductible (expressed in hours) that must elapse before coverage begins; losses within the waiting period are your retention.
Indemnity period: The time it reasonably takes to restore normal operations after the outage, subject to your policy’s BI time limits.
Location specification: Some forms identify whose property must suffer damage (e.g., generating plant, substations, or service/utility property delivering to your premises). The exact definitions are policy‑specific.

Snapshot of common configuration elements

Element	How it appears on the policy	Hospitality implications
Covered services	Power, water, sewer/steam, communications selected by box or schedule	Ensure selections match real dependency (e.g., kitchens/boilers for steam; VoIP/internet for events)
Sublimit	Separate, lower than overall BI limit	Choose an amount that reflects plausible outage duration × average daily gross profit
Waiting period	Time deductible (e.g., measured in hours)	Align with backup capability; shorter waiting periods cost more
Extra Expense	Included with or without limitation	Verify if Extra Expense is subject to the same sublimit or a separate provision
Trigger	Direct physical damage to specified utility property by a covered peril	Non‑damage outages (e.g., conservation orders) typically do not qualify

Note: Exact terms vary by insurer and form. Your broker should review the schedule and wording against your operations, occupancy mix, and loss prevention plans.

How it interacts with hotel/venue Business Interruption

Primary BI vs. Off‑Premises Power: Standard BI generally requires physical damage at your premises. The Off‑Premises Power extension broadens BI to offsite utility damage.
One claim, multiple lenses: A grid‑caused outage could create BI loss, Extra Expense (e.g., generator rentals), and potential spoilage or equipment breakdown. Coverage for each depends on the endorsements purchased and their limits.
Waiting period coordination: Your BI and Off‑Premises Power waiting periods may differ. If the off‑premises outage drives the loss, the utility services waiting period governs that portion of the claim.
Indemnity timing: The loss period ends when service is reasonably restored and operations can resume, even if occupancy or bookings take time to rebuild; check your form for any “resumption of operations” and “due diligence” duties.

See hospitality‑specific BI context in Hotel Insurance and Hospitality Insurance.

Selecting limits and waiting periods: a practical approach

Quantify daily dependency: Estimate daily gross profit from rooms plus F&B and other outlets that would be impaired by a full outage.
Model duration scenarios: Consider short (hours), medium (1–3 days), and extended outages (multi‑day) informed by your local infrastructure and contingency plans.
Evaluate mitigation: Backup power capacity (kW/kVA and run time), water storage, and data/communications redundancy reduce expected loss and may support a longer waiting period to save premium.
Align sublimit to scenario: Choose a sublimit that covers a realistic multi‑day outage after the waiting period, including Extra Expense for generators and temporary services.

Claims readiness and documentation

If an outage occurs:

Protect people and property; activate contingency plans (backup generators, manual check‑in, cold storage triage).
Document the event: time of outage/return to service, utility notices, and photos of operational impacts.
Track loss: separate lost revenue by department (rooms, F&B, events) and itemize Extra Expense (rental equipment, fuel, labor, logistics).
Engage your broker promptly so the insurer can confirm triggers, waiting period application, and sublimits. Summit’s team can coordinate with adjusters and restoration vendors—see Claim Services.

FAQs

Is planned load shedding or voluntary curtailment covered? Policies typically require direct physical damage at utility property by an insured peril. Planned or purely economic outages generally do not meet the trigger.
Are overhead or transmission lines included? Treatment varies by form. Some endorsements differentiate among generation, transmission, and distribution property. Confirm how your policy defines “utility services property.”
Does this cover internet/phone outages? Many forms allow communications as a covered service if selected. Review whether data/telecom is scheduled and whether the same sublimit applies.
How does this differ from equipment breakdown or spoilage insurance? Utility Services Time‑Element addresses income/expense from off‑premises utility damage. Equipment breakdown/spoilage address damage or spoilage to your property from mechanical/electrical accidents or temperature change; they are complementary.

Hospitality Utility Services Time‑Element (Off‑Premises Power) — Canada