Your Hurricane Season Insurance Checklist

Multiple researchers and weather organizations are predicting a more than usually active hurricane season this year. According to noted forecasters at Colorado State University, we could see 16 named storms, 8 hurricanes, and 4 major hurricanes develop in the Atlantic Ocean during the June 1 – November 30 hurricane season. When you consider that an average hurricane season brings around 12 named storms, 6 hurricanes, and 2 major hurricanes, these predictions could mean big trouble for the eastern seaboard of the United States. picture of hurricane

If your business is located in an area that is considered vulnerable to hurricanes (or really anywhere on the east coast – remember Hurricane Sandy in 2012?), then you need to take the time to seriously review your insurance coverage, and make sure that your business is protected. A great way to start is by reviewing our hurricane season insurance checklist.

The Impact of Hurricanes

Before we start on the specifics, let’s take a look at some examples that illustrate how hurricanes affect businesses. On a large scale, the impact of hurricanes on businesses can sound astronomical: Hurricane Dorian in 2019 caused an estimated $25 billion in insured damages, Hurricane Irma in 2017 caused businesses to lose a staggering $2.75 billion in sales, not including damages to property, and Florence in 2018 caused around $700 million in lost sales. 

It may be hard to wrap your head around those figures, but consider that, according to the U.S. Small Business Association (SBA), 90% of small businesses fail within two years of being struck by a disaster. It’s not hard to see why. Take the example of John Treece, founder and CEO of DMA Sales, which sells automotive parts to big box retailers and distributors out of Tabor City, North Carolina. His business was hit hard by Hurricane Florence in 2018, and he had to close up shop for 2 whole weeks. He also lost the roof of his warehouse when it was literally “peeled off” by the wind, which caused a further $200,000 in water damage to his inventory. Many small businesses would not be able to survive a long-term closure or such a huge financial hit. That’s why making sure you have the right insurance is so important.   

The Checklist

It is clear that hurricanes can have an overwhelming financial impact on the economy as a whole. And the individual example above makes clear that behind all of those big numbers, there are many small business owners who are left struggling to keep their businesses afloat. The right insurance policies can help. 

Although small business owner John Treece was hit by one hurricane, the damages done to his business were caused by different things: wind, water, and forced closure. He would actually need multiple types of insurance policies to make sure that his losses were covered. As a business owner, you need to sit down and evaluate what you currently have and what you might need from the following checklist:

tree fallen over a house's roof.

  • Property Insurance – most of your business’ hurricane coverage will come from your commercial property insurance. If you have a bundled Business Owner’s Policy (BOP), then general property damage will be covered under this policy. However, if you are in a hurricane-prone area, then it’s a good idea to take a closer look at what type of property coverage is available based on your location, your proximity to the coastline, and your carrier. Depending on these factors, and how much you are willing to pay, you may have:
  • All Perilthis is the most comprehensive type of policy, and will cover everything except what is specifically excluded from it.
  • Named Perilthis type of policy is cheaper than All Peril, but covers a lot less. As its name implies, it covers only what is named in the policy.
  • Wind and Hail – this is the cheapest of the policies, but it only covers damage caused by wind and hail. If rainfall is a concern, you will need a more comprehensive policy.
  • Flood Insuranceif there’s a chance that you could be hit by a hurricane, it is vitally important to know that water damage is NOT covered in the same way as wind or storm damage. In John Treece’s case above, his water damage should be covered as storm damage under his property insurance policy. Why? The difference is where the water comes from. His water damage was a result of rainfall from above. If, however, rising water had flooded his warehouse, he would have had to have flood insurance to cover his losses. Rising water is not covered under most policies, so make sure you are not only covered for wind and storm damage, but also flood damage.
  • Business Interruption Insurance the above policies cover the physical damage to your business, but what about the losses you will incur from having to close your doors for an extended period of time? Repairing your business won’t be much use if you lose so much money that you are unable to reopen. Business interruption policies will help cover things like lost profits, employee wages, and the costs of a temporary location. These types of policies are add-ons to your other commercial insurance, so ask your agent about your options.

Don’t Forget the Basicschecklist with lines and a circle with check marks and a hand with marker checking off the last circle.

If you already have all of the policies above, great – but don’t sit back and relax yet. Don’t forget to check all the basics related to your policies, like:

  • Are the policies up-to-date?
  • What are the deductibles, and are there deductibles that are specific to named storms/hurricanes?
  • Do you have off-site property or inventory, and is it covered?
  • What could happen if you need to evacuate and leave your business empty for days or weeks? For example, could mold become an issue and, if so, will your policy cover the clean up?

Hurricanes and major storms will happen. Nothing can change that, and nothing can fully take away the stress and heartache of seeing all of your hard work threatened. But the right insurance policies can help to make things right if the worst happens. At EZ.Insure, we’re here to help you find the right coverage. We’ll connect you to your own knowledgeable agent who will review all of this information with you and find the right plan at the right price for you. No hassle, no obligation. Let us help bring you peace of mind. To get started simply enter your zip code in the bar above, or you can speak to an agent by calling 888-615-4893.

Flood Season Is Here: Is Your Business Covered?

Every year, the U.S. suffers on average $8-10 billion dollars in damages from freshwater flooding. Massive storms in August 2016 pushed that number to around $15 billion. But what do these numbers mean for individual business owners? 

At least 13 million properties in the U.S. lie within flood zones, according to FEMA (Federal Emergency Management Agency). If your business is located in a flood-prone area, it is definitely wise to check your flood coverage, as well as check whether or not you are required to be covered. buildings with high water flooding the area.

The average cost to a business affected by a flooding event is a concerning $90,000. Moreover, about 25% of businesses that close due to flood damage never reopen, according to the Insurance Institute for Business and Home Safety. Flooding is obviously a serious issue, so let’s take a look at the ins and outs of insurance coverage for this catastrophic event.

Is Your Business Covered?

The first question you need to ask is whether or not your business is covered for floods. If you have a standard commercial insurance policy, the answer is no. Damage caused by some types of natural disasters – such as those involving lightning or wind – are usually covered, but water-related destruction is usually treated as a separate case. If you want your business to be protected from flood damage, then you will need to buy a special policy.

Is Your Business Required to Be Covered?

Some businesses are actually required to purchase a flood insurance policy. Flood insurance is mandatory if your business is located within a flood zone and is mortgaged through a lender that is insured or regulated by the federal government. Whether you are located in a flood zone is not a matter of opinion; rather, FEMA has created flood maps that designate certain areas as Special Flood Hazard Areas (SFHA). An SFHA is an area that has been determined to have a 1% annual chance of flooding every 100 years. Flood maps are available online; check to see if you are located in one of these areas.

cartoon of a woman pushing a door closed to prevent water from coming in.
It may be wise to consider flood insurance, especially remembering that the average claim for flood damage is around $90,000.

Should Your Business Be Covered?

You might feel that if you are not located specifically in an SFHA, then you do not need to purchase flood insurance. While you are not required by the government to do so, it may be wise to consider it, especially remembering that the average claim for flood damage is around $90,000. Some recent studies are suggesting that FEMA’s maps are inadequate and don’t show the full picture of flood risk, so you may be laboring under a false sense of security. Even FEMA acknowledges that over 20% of flood claims come from businesses located outside of SFHAs. 

Take into consideration your actual risk. For example, is your business in an area that experiences heavy snows in winter and warm springs, leading to fast thaws? Are you in an area prone to moderate to heavy rainfall? If so, clogged drains could spell disaster. Ask yourself questions such as these and, if the answer is yes, it is probably best to consider adding a flood policy.

How Do You Get Flood Insurance?

Whether you are required to get flood insurance or you have decided that it is best for your business, the only way to get a policy is through the National Flood Insurance Program (NFIP). However, the government does not sell policies directly; you will have to contact an insurance professional who is familiar with the NFIP. To get started, simply enter your zip code in the bar above, or speak to an agent by calling 888-615-4893. 

What Does Flood Insurance Cover?

Once you decide to buy flood insurance, it is important to know what it covers (and doesn’t cover). Generally, for small to medium-sized businesses, there are two types of policies:

  • Commercial Contents: this type of policy provides coverage for your inventory, merchandise, machinery, tools, equipment, fixtures and any other contents within your business. Covers up to $500,000.
  • Commercial Building: this type of policy covers the actual structure of your business. If you don’t own the building, then the policy will cover any improvements you made to it. Also covers up to $500,000.

You can purchase both types of policy, thus giving you up to $1 million in coverage.

What Doesn’t It Cover?

two hands with pens in them pointing at paperwork.
Discuss with an agent what type of flood insurance you want and what coverage you are looking for. They will notify you what flood insurance does and does not cover.

You should also be aware that there are some things these policies don’t cover, including:

  • Vehicles
  • Financial losses caused by business interruption
  • Property and belongings outside of the building
  • Mildew and mold may be covered, but is evaluated on a case-by-case basis
  • Damages caused by sewer or drain backup (unless caused by a flood, which is defined as waters covering at least two acres or affecting two properties). Remember that if waters come from above (like rain clogging gutters and leaking onto your inventory), you may be covered by your standard  commercial insurance policy.

Now that you have the facts about flooding and the protection available, you can make an informed decision about what is best for you and your business. If you need help connecting with an agent, or have any questions about any aspects of commercial insurance, EZ.Insure is here to help – and we will always do it completely free of charge. And we’ll never hound you with phone calls the way other companies do. To get started, simply enter your zip code in the bar above, or speak to an agent by calling 888-615-4893.