Last Monday, April 28, Spain suffered an unprecedented power outage, which lasted more than 12 hours in some areas. During this time, activity came to an almost complete standstill, highlighting our high dependence on the electricity supply and the lack of preparation—both at the individual and business levels—to deal with an incident of this type. The power outage highlighted the fragility of the national electricity system and the need for an urgent overhaul of the electrical grid.
Consequences of the power outage in Spain
Although the causes of the blackout on the Iberian Peninsula are still under investigation, the power outage caused logistical chaos: air, rail, and sea traffic ground to a halt, and in many cities, the lack of traffic lights caused chaos in the streets. Transportation networks such as trains and subways were out of service. Restaurants, businesses, hotels, factories, and offices were forced to shut down.
While some businesses had uninterruptible power supplies (UPS), which provided a few hours of additional autonomy, only companies with their own generators or power units were able to continue operating normally, also protecting perishable goods stored in refrigerated equipment.
What impact does a blackout have on insurance?
This type of incident has significant insurance implications. Below, we detail some coverages that may be activated, depending on the type of policy:
1. Travel Assistance
- Travel assistance policies can cover extraordinary expenses (such as accommodation) incurred by travelers affected by flight or train cancellations.
2. Home and Multi-Peril Policies (businesses, restaurants, SMEs)
- Deterioration of refrigerated goods due to power outages: Some policies include this optional coverage, provided there is actual deterioration of the refrigerated goods. For example, a freezer can adequately preserve food for up to 24 hours without power, while a refrigerator does so for a significantly shorter period. This coverage typically includes monetary or temporary deductibles.
- Electrical Damage: Voltage fluctuations when power is restored can damage appliances, computers, machinery, or electrical installations. Some policies cover this type of damage.
3. Comprehensive Property Damage (TRDM)
In addition to the coverage for Deterioration of Refrigerated Goods Due to Power Outage and Electrical Damage, already discussed in the previous point, a third coverage may be activated:
- Loss of Profits Due to Power Failure: This coverage, common in TRDM policies, is activated if the blackout has a cause covered by the policy (for example, fire or explosion). Furthermore, it usually has a temporary deductible of more than 24 hours, so it would not apply to shorter outages.
What if the blackout was a cyberattack in Spain?
The origin of the blackout has not yet been confirmed, but its nature may be key in determining what coverage applies and who should assume claims:
If it is confirmed that it was an act of cyberterrorism, the Insurance Compensation Consortium could come into play.
You may be interested in: How to protect your business against cyberattacks? Cybersecurity recommendations for companies
The importance of risk management
Beyond insurance coverage, this incident is a reminder of the importance of prevention and business resilience. Companies that had generators were able to continue operating relatively normally.
At O. Brokers, we recommend:
Develop contingency plans that include specific protocols for power outages.
Evaluate current policies to identify potential coverage gaps.
Consult with a professional broker, who can offer personalized advice and design an insurance program aligned with the real needs of each company.
Our CEO, Marta Oller, was interviewed on April 30th on TV3’s Tot es Mou, where she analyzed the consequences of the blackout and offered practical recommendations for businesses and individuals.
In an increasingly connected world, cyberattacks represent a real and constant threat to companies. At O. Brokers, we help you protect your organization with comprehensive Cyber Risk and Crime solutions, covering everything from immediate response to full recovery. Request a free audit and ensure the continuity of your business in the event of any incident.
