Natural catastrophes, including hurricanes, tropical storms, tornadic supercells, and other weather phenomena can bring severe winds, powerful storm surge and widespread flooding that can be devastating to businesses and communities. In addition to direct property damage, businesses can also suffer losses as a result of damage to third parties, such as utility service providers, their customers, and their suppliers.
A single storm can cost a business in the affected area thousands or even millions of dollars in property damage and lost revenue as they recover. It is critical that property owners know what they must do if they suffer losses before these widespread weather catastrophes occur.
In the event of a severe weather event, business owners should be prepared to take these five critical steps as soon as it is safe to do so.
1. Report the loss to your broker and insurer(s).
Make sure to specify the affected location(s) along with the date of loss. When reporting a loss, be as broad as possible in describing the type and extent of damage suffered. Share with both brokers and insurers full contact information for your organization’s risk manager or other point of contact.
Be prepared to convey what happened, where it happened, and when it happened. Be as detailed as possible, identifying the scope of the impact including whether multiple locations are affected.
2. Assemble your claim team.
Among other members, your team may include the risk manager, property claim advocate at your broker and the heads of various departments within your organization, including sales, service, maintenance, inventory, engineering, accounting and legal.
A specific person should be responsible for managing all onsite contractors and documenting and tracking all activity and costs.
Once assigned, an adjuster should be apprised of all activities to obtain understanding and agreement by the relevant insurer(s). Document meetings and conversations in writing.
3. Create accounting codes for all costs and begin to document physical damage.
Documentation can include photographs and video as well as news reports and social media posts. This information should be kept in an accessible location to share with insurers, and you should keep a copy for your records.
It’s important to create accounting codes to track costs, which may include:
Purchase orders;
Sales receipts;
Capital equipment purchases; and
Any other incremental or additional expenses.
4. Assess and begin to address damage and operational disruptions.
Companies should assess whether temporary repairs to property and other steps to mitigate business loss are needed. A storm could have significant implications on inventory, supplies, finished products and work in progress.
It’s important to understand that business restoration may be a long-term, iterative process. An organization’s initial response may not be effective, and it may be necessary to change course. It’s also vital that companies document all activities, with email traffic kept in a separate location so that information may be accessed later.
5. Assess the global financial impact to property and to the business.
Soon after a loss, an organization should create a rough order of magnitude for physical damages and business impacts. An experienced broker can help to appropriately document these impacts and make early and interim requests for financial reimbursement from insurers.
Again, this is an iterative process and may require adjustments along the way. Your broker advocate should work to request advance payments from insurers as monies are committed or spent.
How Lockton can help
Whenever an organization is affected by a hurricane or other severe weather event, it’s important to have access to experienced brokers who understand how insurance coverage may or may not apply and can help you manage potentially complex claims requirements.
Your Lockton broker is here to help you organize your claim, make optimal use of internal and external resources, accelerate your recovery, and assist your internal team in learning lessons from a catastrophe to better prepare for future ones.
For more information or help in managing a hurricane or tropical storm loss, contact your Lockton broker.