Gap persists in perceived vs. actual business disaster prep, Nationwide reports
Insurance coverage gaps can lead to significant out-of-pocket costs after weather-related property damage.
Insurance agents who serve commercial property owners play an integral role in helping these insureds adequately prepare for weather-related disasters, Nationwide reported in its recent Commercial Lines Protection Survey.
Survey results were compiled from interviews conducted with 500 commercial property stakeholders and 400 independent insurance agents in August and September 2023.
Most commercial insurance policyholders report they have completed some manner of weather risk mitigation. Eight out of 10 insurance agents report talking regularly with business clients about weather risk, however the study indicates insurance agents could do more to promote “property-protection resources” such as replacing old windows, installing roll-down shutters over storefronts and keeping a back-up generator on site.
“Business owners have a long list of priorities as they keep their operations going, so it’s important for their agent to be prepared to talk to them about the weather risks that could impact their locations throughout the year and share valuable resources on how to mitigate those risks to protect their properties, employees and customers,” Mark Berven, president and COO of Nationwide’s Property & Casualty organization, said in a blog post about the Survey.
More than half of survey respondents (53%) said they would spend more to increase their property’s resilience.
Coverage gaps persist
“It’s encouraging to see many property stakeholders feel prepared for severe weather events, [but] our research indicates there’s a discrepancy between their perceived readiness and the reality of their coverage,” Berven said.
Among the telling results revealed in this research:
- Sixty-two percent of commercial property stakeholders — defined as property owners, business owners and commercial property builders — are “very or extremely concerned” about severe weather.
- Roughly two out of three commercial insureds report being prepared for severe weather.
- More than one in three commercial insureds have experienced weather-related damage in this last five years.
- Four out of 10 commercial insureds who experienced weather damage say recovering took up to three months.
- Half of commercial insureds who experienced weather-related damage said recovering took up to six months.
- Recovery costs per loss often run as high as $50,000.
- Forty percent of businesses fail to reopen following a disaster.
“Gaps in coverage can lead to significant out-of-pocket costs if a loss does occur, underscoring the need for agents to review clients’ policies thoroughly and verify they’re properly insured to value,” Berven said.
The good news/? Nearly all of the insureds interviewed for the November 2023 Nationwide Agency Forward Commercial Lines Protection Survey reported having some form of emergency response plan in place.
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