The devastation caused by the earthquake and tsunami in Japan will undoubtedly have a profound impact throughout Japan and the rest of the world. The immeasurable human toll is self-evident—countless people have lost friends and family, and face continuing threats posed by damaged nuclear facilities. As Japan begins to heal, businesses around the world need to examine their operations and assess their losses given Japan’s critical importance to the international economy. Indeed, U.S. companies—far removed from the epicenter—may face related disruption and losses.

Many U.S. businesses, however, may find solace in their insurance assets. For example, property insurance policies often provide “time element” coverages that protect an insured against economic losses. One such “time element” coverage, “contingent business interruption” coverage, may be included in the policy form or added to the standard commercial property policy by endorsement. Contingent business interruption coverage protects against economic losses caused by the policyholder’s inability to receive a supplier’s goods or services because of damage to or destruction of the property of an insured’s suppliers or customers by an insured peril. As such, this coverage may be an important asset protecting American loss of business caused by delays in supply chains as a result of the earthquake and tsunami off the coast of Japan.

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