When Canadian wildfire smoke blanketed large parts of the US last month, businesses hundreds of miles from any fire faced an immediate operational problem: bad air stops a business just as effectively as a physical disaster. Air quality alerts kept customers indoors, outdoor work stopped, and some facilities needed professional remediation before they could reopen. Wildfire smoke is now a business continuity risk for companies nationwide, and most emergency response plans have not kept pace.
Rob Hoover (pictured), senior vice president and risk advisor at Brown & Brown, walks through where continuity plans fall short, what insurance coverage gaps businesses miss most often, and how to build a smoke-ready emergency response from the ground up.
Smoke causes measurable damage to a business even when no structural contact occurs. Most companies don't discover the full range of that damage until a claim is already in progress. The mechanisms are consistent, regardless of the fire's source or distance.
"Wildfires grab the headlines, but a kitchen fire or a blaze at a neighboring facility can create the same kind of disruption," Hoover said. "Smoke from any source can clog air filters, overheat HVAC systems, and trigger a business interruption."
The air handling system is typically where disruption begins. The EPA's Air Quality Index classifies fine particulate matter (PM2.5) above 150 as unhealthy for the general public. States including California have written that threshold into their workplace protection rules for outdoor workers.
"The HVAC piece is where a lot of businesses get hurt without expecting it," Hoover said. "Smoke clogs filters. Clogged filters strain the system. A strained system fails, and a failed system can shut you down just as effectively as a fire would. That's a business interruption with no flames in sight."
Smoke also settles into fabric, inventory, and building materials long after the air outside has cleared. According to Hoover, his team handled a seven-figure claim after exhaust smoke entered a luxury apartment building. There was no fire and no structural damage, but the remediation was extensive and costly.
The financial exposure extends beyond remediation and cleanup costs. Businesses that stay open can still lose revenue while smoke keeps customers away.
"When air quality drops, foot traffic follows," Hoover said. "Your team either can't work outside or shouldn't. You can stay open and still watch your numbers crater."
Most businesses assume smoke damage is covered under their property policy. That assumption is where coverage problems start, and it tends to surface at the worst possible time.
"The coverage part is where I see the most painful surprises," Hoover said. "Smoke gets overlooked in insurance planning all the time. There's a widespread assumption that smoke damage is covered, but that's not always the case. Coverage depends on the policy language. Some policies respond to smoke claims. Others exclude them entirely."
The physical damage trigger is the most common source of that gap. Many property policies require direct physical damage before business interruption coverage activates. A revenue drop tied to poor air quality often doesn't clear that bar.
"Civil authority coverage can help if the government restricts access to your area, but it tends to be narrow and time-limited," Hoover explained. Without a qualifying government order, most businesses that lose revenue to poor air quality are left without a policy response.
The renewal cycle introduces another exposure. Carriers can and do adjust policy language at renewal, Hoover warns, and smoke coverage that existed last year may quietly disappear from the current policy. Most policyholders don't catch the change until they file a claim.
That's why he pushes risk managers to sit down with their broker before renewal rather than after a loss. Ask directly how the policy responds to a smoke event, what conditions trigger coverage, and what has changed since the last renewal. Get those answers on record before the policy renews.
"Coverage gaps show up when you can least afford the surprise," Hoover said. "Read your policy before every renewal and check the exclusions."
Standard business continuity plans are built to protect a location. Smoke events don't respect that logic.
"Businesses tend to write continuity plans for disasters that hit one address," Hoover said. "A pipe bursts or a storm takes the roof, and you activate the plan for that location. Smoke laughs at that model."
The regional scope of smoke events is where single-location plans collapse.
"A smoke event can blanket a whole region for days, sometimes weeks," Hoover said. "It hits your headquarters, your backup site, and your employees' homes at the same time. So 'we'll just work from the other office' falls apart when the other office sits under the same haze."
The open-or-closed binary is also the wrong frame, Hoover argues. A business can stay open throughout a smoke event and still operate at 60 percent capacity. Revenue leaks the entire time, and a continuity plan that doesn't account for partial operation will miss that entirely.
"I push risk managers to stop thinking in terms of open or closed," Hoover said. "Run a tabletop exercise, which is a fancy way of saying gather your leaders in a room and walk through a smoke event out loud. Where does the money leak first? Which supplier goes quiet? How many days can you limp along at 60 percent before it hurts?"
Hoover identifies five elements a smoke-ready plan should address: employee health protocols during poor air quality periods, indoor air quality controls, remote work options where the job allows, a customer communication strategy, and a pre-event broker conversation to pressure-test how the policy responds to smoke.
A smoke risk assessment doesn't start with coverage or operations. It starts with people, and it applies to any business regardless of location.
"Start with people, then work outward," Hoover said. "Ask the blunt question first: if the air outside turned dangerous for two weeks, who on my team can't or shouldn't do their job?"
The assessment then moves to revenue and operations. The questions at this stage address both financial exposure and physical vulnerability.
"Follow the money and the machinery," Hoover said. "Which parts of your revenue depend on people showing up in person or working outdoors? Can your air system keep the inside breathable during a long stretch of bad air, or does it just recirculate the problem? Could smoke damage inventory or sensitive equipment? Would your key suppliers get hit at the same time you do?"
Once those exposures are mapped, Hoover says, the next step is squaring the emergency response plan against the actual policy. Sit down with a broker and ask directly how the policy responds to a smoke event. Ask what conditions trigger coverage, and what renewal language has changed since the last renewal.
The assessment applies regardless of geography or wildfire proximity, Hoover adds. A large industrial fire or exhaust smoke from a neighboring operation can produce the same outcome as a distant wildfire. Businesses that plan for smoke year-round rather than only during wildfire season recover faster.
"Smoke is too often the risk nobody planned for and everybody assumed was covered," Hoover said. "Sort out your plan before the smoke arrives and confirm what your policy actually says. Finding out during a claim is an expensive way to learn."
