Learning from Hurricane Irma: Properly insuring & protecting your business
If Hurricane Irma has taught Florida anything, it's to plan for the worst and hope for the best.
Hurricane Irma is not a distant memory for most of South Florida and yet the next hurricane season officially began on June 1.
The National Oceanic and Atmospheric Administration (NOAA) recently released its predictions for the 2018 season and the results do not provide much relief for Floridians. The NOAA predicts a 70% likelihood of 10 to 16 named storms, of which five to nine could become hurricanes, including one to four major hurricanes (meaning category 3, 4, or 5).
Thousands impacted in Florida
Hurricane Irma impacted over 90,000 businesses and 58,000 commercial properties in Florida based on the most recent statistics released by the Office of Insurance Regulation. While many businesses and commercial properties received the insurance coverage they expected, others were left wondering how or why their claim was denied.
Although hurricane season is here, there is still time to make sure your business has the coverage it needs.
Coverage gaps?
Understanding whether any coverage gaps exist is important as you prepare for the 2018 hurricane season. While you may believe your business is protected from hurricane damage under a wind policy, the policy may not provide as much coverage as you hoped.
As an example, some wind policies exclude coverage for interior rain damage unless there is an “opening” in the roof caused by wind. If your policy includes such a provision, you may see your recovery limited or interior damages denied.
Evaluating your policy now to determine whether such a limitation exists can help you determine whether a different type of policy or coverage is best for your business.
Deductibles, loss of income, business interruption
Deductibles, by design, also present a potential gap in coverage. Waiting periods can serve as a form of deductible such as coverage for damages resulting from civil authority which is often accompanied by a 72-hour waiting period before coverage begins. After the application of this long waiting period, there is often little coverage remaining for your loss of income due to damages resulting from civil authority. If coverage for lost income is a priority for your business, make sure your policy provides the added coverage you need for business interruption.
Additionally, many businesses were forced to undergo substantial repairs, and are still in the process of those repairs, due to damage caused by Hurricane Irma. These repairs, and any accompanying upgrades, may impact the total insurable replacement cost value of the business.
Updated ‘statement of value’ is key
With a number of commercial insurance policies, insureds are expected to provide an updated statement of values on each renewal anniversary. Insurance premiums are then based on these statements of value. The maximum amount payable on a claim may also be based on the most recent statement of value on file with the insurance company. If a statement of value is not updated to reflect the current insurable value of the property, the property may be underinsured and you may not recover the full value of your damages.
Related: 4 ways for businesses to prepare for another active hurricane season
An underinsured property based on an outdated statement of value could also impact coverage in a new hurricane claim, potentially even leading to a denial of coverage. As a result, businesses and other commercial properties should ensure they have an updated statement of values submitted to the insurance company, if required.
Photograph & document damage & repairs
Following the significant loss to your business from a hurricane, it may feel like a race to make repairs and resume operations. While most policies require you take all reasonable steps to mitigate your damages, they also impose the obligation to show the damaged property to your carrier.
To navigate this disconnect between policy provisions, it’s good practice to photograph and document all repairs to your property. If possible, notify your carrier and offer them the opportunity to inspect the property before you undertake repairs. The failure to show the damaged property could result in the denial of your claim.
Even if you have secured the right coverage for your business, there are certain policy conditions that must be met before payment is issued. Most policies require the submission of a Sworn Statement in Proof of Loss, which is a sworn statement as to the value and cause of the damage.
Deadlines for claim
Different policies have varying deadlines for the production of a proof of loss. Some policies require a proof of loss to be submitted within 60 days from an insurance company’s request. Other policies require the production of a proof of loss within 60 days after the loss occurred. For the latter, you may not receive a letter from the insurance company requesting the document.
If the current predictions hold true, you can expect another major hurricane impacting Florida this year. If you haven’t had your policy reviewed by a professional to ensure you are properly insured for your needs, now is the time to do it. If Hurricane Irma has taught Florida anything, it is to plan for the worst and hope for the best.
Related: How to work with your insurance agent to file your claim effectively
Gina Clausen Lozier (gclausen@bergersingerman.com) is a partner and Christopher B. Choquette (cchoquette@bergersingerman.com) is an attorney in the Boca Raton office of Berger Singerman.