Hurricane Preparedness and Response
We are the partner you can trust when it comes to protecting your business from storm-related risks.
Hurricanes present serious challenges to businesses, particularly those along the Atlantic and Gulf Coasts. Effective preparation, a well-planned response, and a clear understanding of insurance policies can make a significant difference in minimizing financial and operational disruptions.
Contact Us Today To Learn How We Can HelpPreparing for Hurricane Season
A successful hurricane preparedness plan begins long before a storm is on the horizon.
One of the most critical steps is choosing the right vendors for emergency response and recovery efforts. While insurers may have preferred vendors, businesses should independently evaluate and pre-select response teams that align with their specific needs. Establishing these relationships in advance ensures a smooth recovery process.
Finding the Right Partner
Insurance claims are often complex, and securing the right adjusting and claims team is essential. Collaborating with brokers to identify reputable independent adjusters and forensic accountants can help facilitate a more efficient claims process. Having an internal team—including representatives from risk management, finance, and operations—ensures all relevant information is gathered and documented, reducing delays in claim approvals.
Steps to Prepare
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1. Assemble Your Emergency Response Team
Before a hurricane strikes, it’s essential to have a vetted emergency response team in place. While insurers may recommend “approved” vendors, it’s prudent to conduct your own evaluations to ensure they meet your specific needs. Engage with your insurer about your chosen vendors and set clear expectations to avoid potential issues.
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2. Select Your Adjustment and Claim Teams
The outcome of insurance claims heavily depends on the expertise of your adjustment and claim teams. Collaborate with your broker to identify suitable independent adjusting firms and auditors. Establishing these relationships beforehand can streamline the claims process. Additionally, having an internal team comprising members from risk management, finance, and operations ensures that all necessary information is readily available to support your claim.
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3. Review Percentage Deductibles
Hurricane deductibles often operate on a percentage basis, calculated from the Total Insured Value (TIV) of your property, not the loss amount. This distinction can lead to significant out-of-pocket expenses. For instance, a 3% deductible on a property with a TIV of $250 million equates to a $7.5 million deductible. Understanding how these deductibles apply is vital for accurate financial planning.
Post-Hurricane Response
When a hurricane strikes, immediate action is required to assess damage and begin the recovery process.
Defining the scope of work for restoration companies should be a top priority. Insurers will expect clear documentation of all recovery efforts, and aligning with adjusters early on can help avoid disputes. Given the urgency of hurricane recovery, detailed estimates may not always be possible upfront, but real-time approvals from insurers can help prevent complications down the line.
Post-Hurricane Guide
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Clarify and Document Scope of Work
In the aftermath of a hurricane, clearly defining the scope of work with restoration companies is crucial. Involve your insurance adjuster in these discussions to ensure alignment and prevent disputes. Given the urgency, detailed estimates might not be feasible initially; however, real-time approvals can mitigate potential disagreements later.
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Maintain Active Oversight
Assign a company representative to oversee on-site restoration activities. This presence ensures that all actions align with your company’s interests and that any issues are promptly addressed. Active involvement can prevent misunderstandings and ensure that the restoration process proceeds smoothly.
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Audit Contractor Invoices
Before approving payments, thoroughly audit contractor invoices to verify that all charges are accurate and correspond to completed work. Implementing controls to monitor activities and expenses ensures that you only pay for services rendered and that these costs are recoverable under your insurance policy.
Understanding Hurricane Deductibles
Hurricane deductibles have become more common following major storm events such as Hurricane Andrew in 1992 and Hurricane Katrina in 2005. These deductibles apply to insured property value rather than actual damages incurred, making it crucial for businesses to understand how their policies define and calculate them.
Some policies apply deductibles on a per-location basis, while others calculate them per structure. Knowing which approach applies can significantly impact overall financial exposure. Additionally, businesses should clarify whether their policy distinguishes between property damage and business interruption losses or if both are combined under the same deductible.
Key Considerations in Your Policy
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Deductible Basis
Determine whether the deductible is applied per location or per structure. Applying it per structure can sometimes be more advantageous, as the percentage would apply only to that structure’s TIV.
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Coverage Scope
Ascertain if the deductible pertains separately to property and time element losses or if it combines business interruption and property damages.
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Minimum and Maximum Deductibles
Be aware that percentage deductibles are often associated with a minimum deductible and, less commonly, a maximum deductible.
Building a Resilient Business
By taking proactive measures to prepare for hurricane season, businesses can reduce downtime, protect financial stability, and navigate the complexities of insurance claims more effectively. Ensuring a clear understanding of deductibles, securing experienced claims support, and overseeing restoration efforts can all contribute to a faster and smoother recovery process.
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