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Understanding Business Insurance After a Winter Storm

- Thursday, November 29, 2012

In the winter, all kinds of weather can affect your business. Your business may be covered by insurance for property damage and lost revenue. Even companies located thousands of miles from the storm may be eligible to file claims, so long as they sustained losses related to crucial customers or suppliers in the devastated area.

Here are some answers to how small business owners can get the maximum allowed under their business  insurance coverage.

How does a small company that’s been hit by the storm determine whether it is covered for damages?

Your business has been closed Monday and Tuesday and you’re opening on Wednesday. Figure out whether you can start operating again and get a sense of where your losses are. A critical first step is to get a hold of your insurance policy and read it.

Is disaster coverage a standard part of a basic business insurance policy?

No two policies are identical and this is a complicated area. But business-related coverage typically covers damage to property and if you have that, it almost always will cover lost profits due to the damage.

What should an entrepreneur be looking for in the policy?

See what’s specifically covered. Do you have flood coverage or is it excluded? What about wind damage? What is your policy limit and what’s your deductible? Sometimes there will be sub-limits, so you may have $5 million total coverage for property damage and lost profits, but only $2 million for flood damage.

What other limits might there be in the policy language?

There could be sub-limits or policy deductible differences for flood, or wind, or named storms. That means if a storm is significant enough to receive a formal name, it might have a sub-limit on the amount you get.
 
At what point should the business owner contact the broker or claims adjuster?

Reach out to your insurance broker as soon as you can after you read through your policy. Policies often have specific timing requirements, so check to see when you have to give notice and when you have to provide “proof of loss”—and what that entails. If you can’t, ask for an extension of time or modifications as to what information needs to be provided.

Small companies with low capital reserves will need repairs. What if they can’t wait for a claims adjuster?

The most important thing is to fix that gaping hole in your roof and get your company up and running. Try to get approval from your insurance company for any expenditure you’re making. If you can’t reach them, do what you need to do to get your company back to normal. Just keep careful notes of every expense you’re making and all the communications efforts you’re making to reach out to your insurance company.

What about businesses located around the country that lose revenues because suppliers or customers in the storm zone are out of commission?

Businesses not located in the area may still be impacted. Maybe your business is in another state but a business you rely on was in the heart of the storm. You may have to switch suppliers, and it may be far more expensive to do that now than it otherwise would be. Some property policies have coverage that addresses those kinds of situations. It’s called “contingent business interruption coverage” and it means you may be covered if you suffer a loss, even though you did not have a tree come down on your office.

For information or a review of your business insurance policy, contact TriState Business Insurance.

Bloomberg Business Week