Minnesota Electric Utilities Insurance Policy Information
Minnesota Electric Utilities Insurance. Electric utility companies are responsible for generating and distributing electric power, in turn supplying residences, all branches of commerce, and public infrastructure at the same time.
With modern civilization being, to a colossal extent, entirely dependent on electricity, there is no question that electric utility companies play a vital role in both the global economy and the individual communities they serve.
Electrical utilities generate electrical power, distribute power, or both to residential and commercial enterprises. Service may be provided using overhead lines or underground utility cables. In a power generation operation, energy is produced by various sources and converted into electrical power.
Those sources of energy include the burning of fossil fuel, such as coal or oil, the movement of water or wind, geothermal, biomass, solar, or nuclear. Massive generators feed the initial energy source through transformers to convert it to electrical energy.
The electrical power can be distributed directly to end users by the generating plant or sold to electrical power distribution operations, which buy and sell energy to support the needs of their customers.
While companies providing this invaluable service will strive to ensure that they are not affected by major perils, the risk of disaster can never be reduced to zero. This is why it is crucial for electric utilities to carry the right types of insurance. Learn more about what kinds of Minnesota electric utilities insurance coverage that may entail in this short guide.
Minnesota electric utilities insurance protects electric companies from lawsuits with rates as low as $297/mo. Get a fast quote and your certificate of insurance now.
Why Do MN Electric Utilities Need Insurance?
Like any other public or commercial entity, electric utilities are vulnerable to a multitude of risks. In the form of unforeseen circumstances, they can arrive on any day, often without warning.
Some of the hazards that threaten utility companies are virtually universal, having the potential to cause damage to any commercial venture, while others are more industry-specific.
Property risk is the first type of risk an electric utility has to consider. Buildings and other physical assets, including industrial equipment, may be damaged or destroyed by circumstances such as acts of nature (earthquakes, wildfires, and lightning strikes, to name but a few), as well as theft, vandalism, or accidents.
Such perils are accompanied by direct expenses, in the form of repair or replacement costs, as well as consequential fees in the form of business interruptions.
Liability risk is the second type of threat. Electric utilities can be held responsible for malfunctions or negligent acts that lead to third party personal injury or property damage, for example, in which case the legal costs are likely to be massive.
When an employee suffers an occupational injury or illness, the company can, again, be held liable.
Any significant peril that befalls an electric company could lead to costs so high that the company may not survive - unless it has equipped itself with comprehensive Minnesota electric utilities insurance.
What Type Of Insurance Do Minnesota Electric Utilities Need?
The modern insurance market is both vast and complex - and the fact that each company is unique means that it is crucial to carefully consider whether an electric utility company has the quality insurance it requires.
To achieve complete peace of mind, electric utility companies should always consult with a skilled commercial insurance broker specializing in utilities. These professionals can help utility companies craft insurance programs that cover every eventuality.
Keeping in mind the fact that no two utility companies will have identical insurance plans, these are some of the most important types of Minnesota electric utilities coverage needed:
- Commercial Property - This kind of insurance protects a company from financial losses if its physical assets - including, but not limited, to buildings - are damaged or destroyed by perils that include acts of nature, theft, vandalism, and certain accidents.
- Commercial General Liability - Privately-operated electric utilities will need to equip themselves with several kinds of liability insurance, including general liability coverage. This helps to cover legal and settlement expenses in cases of third party personal injury or property damage claims. Public entities should instead opt for public entity management liability insurance.
- Pollution Liability - This type of Minnesota electric utilities coverage helps manage the costs that result if a company's activities lead to environmental damage. Because these policies offer diverse kinds of coverage, it is crucial to closely evaluate what eventualities any given plan includes.
- Equipment Breakdown - Should crucial equipment that a company relies on break down, this type of insurance can help bridge the revenue lost as a result.
- Workers Compensation - If an employee is injured at work, or falls victim to an occupational illness resulting from exposure to hazardous substances, employees are liable for the associated costs. Workers' comp covers such employees' medical bills, but also any income they lose if they time to recover.
While any MN electric utility will need to carry these types of insurance, they are simply examples of the coverage a company within this branch of commerce requires.
Commercial insurance brokers are crucial on the path toward obtaining a Minnesota electric utilities plan specifically tailored to an individual business.
MN Electric Utilities' Risks & Exposures
Premises liability exposure at the main office location is light as communication with customers is primarily done by mail or electronically. Customer and visitor access should be limited and well controlled. Stairways, railings, and floor coverings should be in good condition. Exits should be clearly marked and free of obstacles.
Adequate lighting should be available in the event of a power outage. Parking areas should be maintained free of snow and ice. Premises should be fenced, well-marked, and patrolled where necessary.
Off-site premises exposures are heavy due to the running of lines or cables, both above and below ground. Rights of way must be secured so that maintenance of the lines can occur as needed. Excavation and maintenance of underground lines could cause damage to the property of others.
Vehicles loaded with cranes or cherry pickers present an operations exposure while in use. Flaggers or signs should be used to alert traffic around the working area. Towers pose an attractive nuisance exposure to children and teenagers and should be fenced and regularly inspected.
Terrorism is a potential threat to public utility services. There must be security sufficient to deter unauthorized access to any part of the utility's premises.
Environmental liability exposures are high due to the potential contamination of air, soil, or water. The type of fuel the emissions, waste, and controls in place are important to evaluate. All must meet state and federal requirements.
Workers compensation exposure is high. Working with power lines can result in electrical shock, burns, and falls from utility poles or cherry pickers. There should be adequate shutoff and lockout procedures to make sure the wiring is not live.
Lying of underground cable can result in back sprains and strains from dragging heavy cables, or exposure to collapse hazards. Drivers can be injured in auto accidents while driving heavy equipment or while working in adverse conditions.
Failure to adequately warn motorists of road hazards can result in a worker being hit by a motor vehicle. Hearing loss can occur due to exposure to high noise levels. Lung, skin, and eye irritations can result from exposure to contaminants.
In the office where most work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations.
Nuclear energy operations present specialized concerns that should be reviewed and evaluated by nuclear hazard experts.
Property exposure is high at a generating plant from burning fuels or converting other sources of energy into electricity. Some fuel sources are highly combustible. In the distribution of the power, the age, condition, and maintenance of the equipment are critical concerns in assessing the fire potential.
Equipment and machinery must be maintained on an ongoing basis. Electrical wiring must be up to code and adequate for the operations.
To remain competitive, there should be a program in place to offer up-to-date equipment and a program to replace old with new on a scheduled basis. Adequate fire detection and suppression equipment are recommended. Power surge equipment is needed to prevent lightning and other power losses. Utility companies may be a target for terrorists.
Appropriate security controls should be taken including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Nuclear energy operations present specialized property concerns, which should be reviewed and evaluated by nuclear power experts. Business interruption can be high as backup facilities may not be available. Extra expenses may be high, as repairs must be made quickly to reduce downtime to dependent customers.
Equipment breakdown exposure is high due to the specialized nature of the equipment. Equipment must be regularly tested, maintained, and documented. Back-up generators should be available.
Crime exposure due to employee dishonesty is extremely high. Background checks should be made on all employees who handle funds. Ordering, billing, and disbursements must be handled in separate areas. All must be reconciled on a regular basis and regular audits conducted.
Computer fraud potential can be high as many customers pay by Electronic Fund Transfer (EFT). Adequate security is required to prevent unauthorized access to customer information.
Inland marine exposure includes accounts receivable as customers are billed for services, computers, contractors' equipment, radio towers and transmission lines, and valuable papers and records for customers', suppliers', and regulatory information. Computer systems must have adequate security features to prevent unauthorized access from hackers.
Contractors' equipment can include excavation machinery, cranes, and cherry pickers in addition to employees' tools. Equipment should be kept on premises, not at remote locations, with portable items locked in the cab. Towers and overhead transmission lines are subject to loss by fire, lightning, the weight of ice and snow, wind, vandalism, and collision with aircraft.
All equipment must be well maintained. Towers should have guy wires, be grounded, be lighted, and have de-icing controls in areas with inclement weather. Towers may be attractive nuisances for children and teens.
Adequate security, including fencing, should be appropriate for the area. Emergency plans must be in place and reviewed regularly. Duplicates of records must be made often and stored off site.
Commercial auto exposure is high due to the ongoing transport of equipment, fuel, and machinery. Drivers often must operate in the dark or in adverse weather conditions while driving vehicles loaded with heavy equipment, cranes, or cherry pickers.
Vehicles may be parked along roads, disrupting regular traffic. Proper signage is required to warn drivers. MVRs must be run regularly on all drivers. Maintenance of vehicles must be ongoing with records retained in a central location.
Minnesota Electric Utilities Insurance - The Bottom Line
To discover more information the the types of Minnesota electric utilities insurance policies need and how much the cost, consult with a reputable commercial insurance broker that is experienced in utilities insurance.
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An insurance contract is an agreement where one party obligates itself to make good the financial loss or damage sustained by a second party when a designated event occurs. The event must be fortuitous and happen by accident. The named insured must have insurable interest at the time of loss. One final point is that in order for any contract to be considered insurance, there must be a risk of loss.
Fortuitous Event - An occurrence largely beyond the control of any involved party; happening by chance; accidental; for example: fire, lightning, windstorm, explosion or flood.
Insurable Interest - In order to recover from a loss to property, the holder must have an insurable interest in the property at the time of the event or occurrence. An insurable interest is any right, title or interest in property where the holder of that right, title or interest sustains financial loss if the property is damaged or destroyed. Any lawful and substantial economic interest in the safety or preservation of the property from loss, destruction or damage also constitutes an insurable interest.
An entity does not have to be the property owner to have an insurable interest in it. Examples include, but are not limited to, mortgagees, trustees, vendors, lessees and bailees. Insurable interest for any entity must exist at the time the loss occurs.
Risk Of Loss - If property could never be destroyed, there is no risk of loss. If property must necessarily disintegrate or be destroyed, there is no risk of loss. Between these two extremes is the exposure of risk that can be insured.
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