Business Income from Dependent Properties

Written by
April 16th, 2012

The Business Income from Dependent Properties portion of your property policy provides insurance coverage in the event the damage or destruction of non-owned property reduces or terminates the insured’s earnings. Dependent property coverage extends to protect the insured from business income losses emanating from the suspension of operations of non-related entities. You don’t want to underestimate the impact that dependent properties could have on downtimes and the restoration and resumption of a business.

What is a Dependent Property?
There are four types of entities that qualify as eligible dependent properties:

  1. Suppliers: 
    ISO refers to these as “Contributing Locations” - Contributing locations supply the insured with the parts, materials, or services necessary to manufacture its product or provide its service.
  2. Buyers:
    ISO’s terminology for a buyer is a “Recipient Location” - A recipient location buys/accepts the products, goods, or services of the insured.  This may be the insured’s sole buyer or one that buys a majority of the insured’s output.
  3. Providers:
    ISO’s terminology for a provider location is a “manufacturing location” - A manufacturing location as used in this endorsement, is not a location owned by the insured and part of the insured’s supply chain.  
  4. Drivers:
    Also known as a “Leader Location”  – these can include anchor stores (Sears, Kohl’s, Wal-Mart, Boston Store, Target, Macy’s, etc.), sports and entertainment venues, and other such operations or entities that draw customers to the area.

For more information about business income from dependent properties, business continuation, business income worksheets or property insurance, contact knowledgebroker Scott Brookes.

About Scott
Scott has over 25 years of risk management, risk control, underwriting and leadership roles with insurance carriers.  He has detailed experience in large accounts, large property exposures including fire protection engineering, property valuation including building, business personal property, business income, and acting as a risk manager for insured’s.  In addition, Scott has written and taught a number of property training classes, property valuation classes, and business income valuation classes.

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