Drought, water-rationing and dry taps are not insurable risks or perils, meaning Cape Town businesses may carry the financial burden of Day Zero alone. Cover for business interruption ordinarily comes into effect when businesses have to close or operate at a reduced capacity as the result of a catastrophic event, and suffer losses. But this does not include drought. One exception is multi-peril crop insurance, which is usually packaged with hail insurance and is extended to farmers in limited amounts. Despite this, insurers may not be untouched should Day Zero arrive. Due to possible secondary impacts of the drought, such as fires, or floods when the rain returns, they may have to pay out claims to affected clients. Businesses should discuss possible claim scenarios with insurers to mitigate risk, said Gary Ferguson of Aon South Africa's technical claims resolution division. "A professional broker will generally run a test scenario to assess the impact of any given event on the risk...

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