Natural disasters (e.g., hurricanes, tornadoes, flash floods, fires, earthquakes) cause billions of dollars of damage every year. Recently, commercial properties have been hit hard as extreme and sudden environmental events cause billions in insured losses across the U.S.
It's never too early to review your coverages and take proper precautions. Property owners can minimize the cost of damage done by a severe storm with proper planning and sufficient coverage. They can also respond quickly when a disaster does strike. Ignoring preparation may leave property owners on the hook for damage done by a severe storm and its aftermath. Investing time now can pay off later.
Research Early
Know which contractors or restoration companies you’re going to call before a storm strikes. The demand for emergency services surges after a natural disaster, and the best options may be unavailable if you wait too long. If you don’t have these relationships in place before experiencing property damage, you will quickly find yourself with a sub-par contractor and a less-than-capable restoration company.
Develop an Emergency Response Plan
Don't wait for a natural disaster warning before preparing. The last thing you want to deal with when a disaster is impending is deciding how to protect your business. Prepare a plan ahead of time so you can react quickly and activate your catastrophic response team.
Evaluate the critically weak points in your operations. Start by evaluating the integral components of your company. Are you providing a service or product? Have operations centralized or decentralized? Map out your production or service cycle by function, capability and/or equipment needs. Do this with an eye toward deciding what you would do if any of the functions or capabilities were destroyed or disabled. Many disasters can restrict access to your facility for six months or more.
Property managers will also want to take this opportunity to review procedures for filing a claim. Additional preparation steps now, will less urgent than during a crisis.
Develop Service-Provider Relationships
You may want to enter into service contracts with temporary facilities and rental equipment and restoration contractors. If an event causes widespread loss, restoration contractors will be very busy. If you have a pre-existing service contract with a restoration contractor, the rates are set and you are a top priority for that contractor to start removing debris, stabilizing structures and repairing your damage. Without a pre-existing contract, you run the risk of escalated rates and may have a significant wait before the contractor gets to your business.
Determine Extra Coverage Needs
Based on the steps above, evaluate if and how much extra expense coverage you need to obtain in your property and casualty insurance policy. There are two types of extra expense coverage:
- Pure extra expense to restore operations
- Extra expense to reduce the loss otherwise payable by the insurance company.
Your insurance policy may have a sublimit, capping how much extra expense is paid. You want the first type of coverage to restore operations, and a sublimit high enough to fund temporary operations for as long as you determine it will take to get back in business.
Keep Policies Safe
Keep in mind that disasters often cause power outages. You’ll want to have access to both digital and printed copies of your policies, key contact information and list of procedures to guide your actions in the time of an emergency. These should include:
- Immediately notify your insurance broker or insurance company with detailed information.
- Leave a telephone number where you can be contacted. Large catastrophes will generate thousands of claims and communication is vital for a quick claim resolution.
- Photograph damaged areas prior to making temporary repairs. It will strengthen your claim and provide the most accurate loss presentation.
- Speak with your insurance company's adjuster before signing any restoration or repair contracts. Your adjuster can play a key role in helping you avoid price gouging. They won’t be able to negotiate a reasonable price for services if you’ve already signed a contract. Your insurance company is NOT bound by the contracts you sign.
- Organize your records. Prepare an inventory of damaged or destroyed property for the adjuster and keep a copy for your records. Do NOT discard ANY items before the adjuster is given a reasonable amount of time to inspect them. Provide available cancelled checks, invoices, etc. that support the value of damaged or destroyed property. Keep ALL receipts and invoices for EVERY expense (e.g., tarps, boards, cleaning supplies) you incur after the loss. These costs add up quickly and may help erode your deductible.
We're Here to Help
You cannot prevent natural disasters, but you can prepare for them. A proactive strategy is much more effective than a reactive one. It can save you time, money, and perhaps customers and your business itself. For more information, connect with a member of our team.