Weathering the Storm: Is Your Business Covered Against Mother Nature?

No matter where you choose to locate your business, severe weather, in one of its many forms, can pose a serious threat to your property. Whether from a hurricane, tornado, flood, or blizzard, weather-related occurrences may leave behind a trail of widespread damage. Sometimes, the resulting damage to a building and its surrounding property is minor; at other times, it may be catastrophic. In any event, it is important to understand the coverage of your property insurance and to purchase additional insurance according to the specific risks of your business.

In general, most property insurance will cover damage resulting from common weather occurrences, such as winds associated with thunderstorms, tornadoes, or hurricanes; lightning; hail; and snow, sleet, or ice. Your policy will pay up to specified limits for weather-related losses to your own property, including structures; permanently installed fixtures, machinery, and equipment; outdoor fixtures; items you use to maintain or service the building, such as appliances; and additions under construction. Please note that a peril-specific deductible (windstorm or hurricane, for example) may apply.

However, some weather-related risks or other natural disasters are often excluded from coverage under standard property insurance coverage because they generally affect those in specific geographic locations. Give us a call to see if separate coverage for any of the following potential hazards is available in your area:

• Earthquakes
• Volcanoes
• Landslides and mudslides
• Tidal waves
• Ocean storms

Another common exclusion from property insurance that can affect all businesses, regardless of geographic location, is damage caused by flooding. To be protected in the event of a flood, you must purchase a separate flood insurance policy through your insurance agent in conjunction with the National Flood Insurance Program. Coverage for non-residential property is available for up to $500,000 for the building and $500,000 for contents.

Ultimately, it is important to remember that not every property insurance policy is the same and to understand the limits and exclusions of your particular policy. To further protect your business from weather-related occurrences, consider also obtaining business income insurance, also called business interruption coverage, which is designed to replace the income your business would generate under normal circumstances in the event of a disaster or other covered peril. In the event your business is forced to close for a period of time or is not able to operate at full capacity because of damage resulting from a covered weather incident, this insurance can help your company get back on its feet by providing funds to help cover critical expenses and lost profit until the business is up and running again.

We can help you identify the most important areas of property coverage for your business and assist you in updating your property insurance policy, if needed. For more information, please give us a call.

Risk Manager Online Vol. 15, No. 4 Copyright © 2007 Liberty Publishing, Inc.