Hurricane preparedness is increasingly crucial for businesses
Business owners who prepare vigilantly are in the best possible position to weather a storm. Here's how...
Rising ocean temperatures have made hurricane season more intense, causing storms to grow increasingly devastating. Nine out of the ten costliest hurricanes to hit the U.S. occurred in the past 20 years. In 2022 alone, hurricanes and floods caused $120 billion in insurance losses, a stern reminder of the need for risk mitigation.
While researchers predict 2023 to be a below-average hurricane season, these storms are only expected to grow stronger and more frequent. For business owners in hurricane-prone areas, there has never been a more important time to prepare. Thorough, proactive planning and investment in protective measures can mitigate risk and minimize claims. Preparation could also lead to more favorable insurance terms and pricing.
Here’s how you can stay vigilant against the impacts of storm damage…
Track storm developments
An important part of hurricane preparedness is knowing whether your business is in an area where a hurricane could strike. The South Atlantic and Gulf Coast are well known hurricane hotbeds, but the whole Eastern Seaboard and some areas of the Pacific are also vulnerable. Additionally, experts have found that warming oceans give landfalling hurricanes a slower rate of decay, which is causing hurricane risk to move further inland.
Tracking storm developments in your area is crucial. Experts predict the paths of storms and forecast a “cone of uncertainty,” encompassing a range of tracks that the hurricane might take. If your business is within the cone of uncertainty, it’s best to err on the side of caution and prepare for the storm to strike.
Before a storm arrives
- Have a plan. Establish or review an emergency action plan that covers prevention, emergency response, evacuation criterion, and key personnel. This can help keep things organized and prevent confusion when a storm hits. Staging drills ensures your plan is effective and that all members are well aware of their roles and responsibilities.
- Make necessary insurance considerations. Some commercial property insurance policies will exclude coverage for things like flooding or named storms. Assessing your coverage, limits, and exclusions will help determine whether you’re prepared for a hurricane or need more coverage. Ideally, you should do this well ahead of any forecasted storms because insurance policies don’t typically take effect immediately.
- Take inventory. Documenting your business’s assets before a storm hits will profoundly benefit the claim process if damage or loss occurs. Substantiating the inventory with photos can also be helpful.
- Prepare the property. Putting up storm shutters, storing loose objects, and stacking sandbags in critical locations can help prepare your property to withstand a storm. Ahead of a major weather event, your local government may offer sandbags and other material resources. You can also move important records and other valuable objects off-site for safekeeping.
- Have your property inspected. Meet with a building consultant to ensure that you’re aware of any potential issues with your property. Confirm that the roof is prepared to handle strong wind and rain, and that plumbing is not prone to clogging. If possible, make plans with a remediation company before the storm to ensure that all immediate necessary repairs can be made afterward.
- Follow National Hurricane Center guidance. Heed official advice offered by the National Hurricane Center to ensure your safety. Make any necessary evacuation plans before a storm hits to prevent delays in travel. Verify that you can access the NOAA radio frequency so you can receive updates if power is lost.
After the storm
- Have policy information ready. Insurance companies can be very busy in the wake of a major storm. Making sure you have insurance policy and contact information on hand is the best way to ensure a prompt response.
- After-storm inventory. Taking another inventory when you can safely return to the property expedites the claim process. This helps the insurance company itemize and determine values for anything that was lost or damaged.
- Remediation. Because water damage can have long-term consequences like mold growth, it’s crucial to handle these repairs quickly. Work with a licensed and reputable contractor to ensure the repairs are thorough. Avoid contractors that ask for payment up front or don’t have remediation experience.
Business continuity
When a hurricane strikes, many business owners will worry about interruptions to service. Preventing a lapse may be easier for an office where the employees can work remotely than for a business that requires employees to be on-site. Manufacturing facilities that require power, water, natural gas, or other resources may not be able to stay open. To offset potential losses, some businesses may run extra shifts to increase output before a storm.
Creating a business continuity plan helps businesses stay operational through disruptive events. Continuity plans provide you with actionable steps that prevent an interruption if your property is affected. Depending on the unique needs of each business, plans may involve setting up and testing backup generators or temporarily moving operations to another location. Because the livelihood of business owners and their employees may rely on the business, they often prioritize staying open if safety can be guaranteed.
Managing your level of risk
The most crucial aspect of hurricane preparedness is knowing your exposure: Are you and your property at risk/? Work to understand if your property can withstand a storm and what your insurance covers if a hurricane hits.
If you’re unsure about what your policy covers, meet with your insurance broker well before renewals to review coverage, identify gaps, explore better options, and make informed decisions. Engaging early helps optimize policy terms and proactively mitigate risks.
Unfortunately, no one knows where — or when — the next major hurricane will hit, but business owners who prepare vigilantly are in the best possible position to weather the storm.
Amy Hahn (ahahn@risk-strategies.com) is director of the National Loss Control Practice at Risk Strategies.
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