Outage policies are often triggered by an unplanned outage event. Many policies define the scope of coverage using outage codes recognized by the North American Energy Reliability Corporation (NERC). For example, triggers of coverage have been defined under some policies as follows:

SF (Startup Failure): An outage that results when a unit is unable to synchronize within a specified startup time following an outage or reserve shutdown.
U1 (Immediate): An outage that requires immediate removal of a unit from service, another outage state or a reserve shutdown state. This type of outage usually results from immediate mechanical/electrical/hydraulic control system trips and operator-initiated trips in response to unit alarms.
U2 (Delayed): An outage that does not require immediate removal of a unit from the in-service state, but requires removal within six hours. This type of outage can only occur while the unit is in service.
U3 (Postponed): An outage that can be postponed beyond six hours but requires that a unit be removed from the in-service state before the end of the next weekend. This type of outage can only occur while the unit is in service.

Scope of coverage

An issue that may arise when determining the scope of coverage under an outage policy is whether the utility properly classified the outage. What if the insured placed its unit into a U3 state when in fact the issue prompting the outage did not need to be addressed within the week?

Special Reports /

How to avoid insurance coverage disputes following electric and gas outages

Related Stories

Recommended For You