What Irma taught us: Bundling communications services might not be the best way to go

The great internet outage of 2017 might be over or nearing an end for hundreds of thousands of South Florida consumers and businesses who lost service from their providers AT&T, Comcast or Atlantic Broadband as Hurricane Irma sideswiped South Florida on Sept. 9 and 10.

But the internet service outages are a good reminder that businesses need to make sure they have business continuity plan. That plan should include redundancy in their systems so they are not heavily relying on one service for all their critical internet-related functions, including their business phone service, said Gus Hurwitz, a law professor at the University of Nebraska and visiting fellow with the American Enterprise Institute.

Many small businesses are run on consumer-grade internet services, which generally gets restored slower than business accounts, he said. It may be time to rethink that.

Consumers also might want to rethink “bundling” their services under one company, he said, so they might not be out phone, internet and television, as some are now. While it saves them money to bundle services under one carrier, customers are not spreading the risk.

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As part of their business continuity planning, businesses also need to analyze insurance policies to see if they would be covered for income losses because of internet outages stemming from storms and other disasters, said Daniel B. Odess, president of GlobalPro Recovery, a construction and insurance specialty firm in Coral Gables.

He said many policies require — or the insurance companies will argue — that the business has to have sustained a direct physical loss or damage to the covered property in order to trigger coverage of loss of income.

“It’s a complicated issue,” Odess said. “It depends on the language in your policy in what constitutes direct physical loss or damage and what triggers coverage in the business income portion of your policy.”

He pointed to the aftermath of the BP oil spill as an example. Beach hotels might not have had oil on their property but were affected by tourist cancellations and the subsequent loss of income. Some were able to recover income losses, however.

There are other nuances in business insurance policies for tenants vs. property owners and some policies don’t cover business losses in the case of wind damage. There might be coverage for income losses in other areas of the policy such as what’s called civil authority — curfews, mandatory evacuations and roadblocks could all attribute to a slowdown or stoppage of your work, Odess said.

“It is a case by case basis and it really does require an expertise to fully understand,” he said. “Just because your broker or agent told you there is no coverage doesn’t mean that it is true.”

This story was originally published September 22, 2017 at 3:24 PM with the headline "What Irma taught us: Bundling communications services might not be the best way to go."