As the east coast digs out of from winter storms Juno and Kari, it is a reminder for business owners across the US to review insurance policies and ensure there is adequate coverage. Not understanding the difference in the types of coverage is one of the most common areas of risk we discuss with potential clients - and it's important.
Below are steps that need to happen now to protect you if something does occur.
Full Review of Policies
All policies require the insured to perform certain steps in the event of a loss. Submit the claim in a timely manner (60-90 days from the date of loss). There are certain timelines you must adhere to if you are going to file suit against the insurance company to dispute the loss. Often this critical component is missed, which waives your rights. Be prepared and review this section of the policy before bad luck strikes.
Property Policy Review
Property insurance policies provide coverage for “all risks,” unless certain risks are excluded. A property policy may exclude coverage for certain types of damage resulting from a storm, such as the flood damage experienced in certain coastal communities in New England, but exclude wind damage. Review your property policies thoroughly to ascertain the extent to which your company is covered for damage that may happen.
Loss of Income
If your business suffers a direct physical loss, most insurance policies would trigger coverage. Any income lost during the event may be covered under this important coverage. In your insurance policy you will find calculations on how the insurance company came up with the amount. In each disaster we have been through this is the most difficult process. You should complete a business income worksheet prior to a loss to make sure you understand the process.
Contingent Business Income
Contingent business interruption coverage may compensate a policyholder for lost profit resulting from an interruption of its business that stems from damage not to its own property, but from damage to a customer’s or supplier’s property. If your business depends upon goods produced by a third party that had its operations interrupted by damage to its operations, the loss of income that you experience due to the failure of that manufacturer to supply you with the necessary goods may be covered under your contingent business interruption coverage.
Another example is if your business doesn't suffer a direct physical loss but is still affected. Think about a hurricane that comes through and affects the services around you but not your building. You may be entitled to lost profit only if you have this valuable coverage.
In order for contingent business interruption to be triggered, the type of peril and type of physical damage that the third party suffered must be the same type of peril and damage covered under your property insurance policy. In other words, your business’s property policy must provide coverage for storms as well as for damage to property.
We recently wrote about the Disaster Table Top Exercise and its importance. (Pull your executive team together for an impromptu meeting and ask them to respond to this question, "If our business was destroyed last night by (Insert Risk) what do we do? You have one hour to come back with a plan.")
GDP Advisors has experience in creating disaster plans that range from sinple one page layout to complex plans meant to assist a multiple location service company survive a natural disaster.
Review your insurance policies. Make sure you and your top team understand them and how they protect you.
We're here for you, so if you need assistance, contact us at 800-473-8697 for a full review of your policies and disaster planning.