Amidst the COVID-19 pandemic, business interruption insurance policies have been a major point of contention. As an active hurricane season approaches, many commercial property and business owners want to ensure their properties and businesses are covered in the event of a storm. Importantly, they want to know whether or not hurricane damage can trigger business interruption claims.
Hurricane Damage and Business Interruption Claims
As many in the Houston area and other coastal cities know, hurricanes can pack a considerable punch when it comes to downpours of rain and wind damage. When these massive storms are forecasted, it’s important that commercial property owners are aware of their insurance coverage options should a hurricane cause widespread damage.
When triggered, business interruption insurance coverage allows a company to stay afloat after incurring losses from disaster-related damages. Often, this type of insurance can make the difference between a business recovering from a loss, being forced to scale back operations, or unfortunately go out of business. While business interruption insurance does offer a layer of protection for a company’s employees, property, and cash flow, coverage can only be triggered in certain specific circumstances. In order to ensure a commercial property is covered after suffering hurricane damage under a business interruption policy, the following items must be in place:
Determine Whether Physical Loss is Present
Unless covered under a specific policy endorsement, business interruption coverage will typically only be triggered in the event physical damage is present at or nearby the place of business. While this physical damage requirement may vary from one policy to the next, it is a common requirement detailed in most commercial property insurance policies.
This physical damage typically occurs following a storm or natural weather event – meaning that if a business property suffered hurricane damage causing it to close for an extended period of time, it will likely be covered under a standard business interruption policy. However, it’s important to note that a business closure due to flood damage from a hurricane is not likely to be covered, as flood and earthquake damage are most typically covered under separate policies or provisions.
Understand the Period of Restoration
It’s standard in most business interruption policies that there is a waiting period, or a period or restoration. This period refers to the number of hours after a covered physical loss occurs that must pass before business interruption coverage can commence paying. This period is usually 48 to 72 hours in length and limited to 30 days; however, it can be extended under certain policy endorsements.
Consider Offsite Utility Interruption Coverage
Certain business interruption policy endorsements can expand coverage. Under certain endorsements, this can include income lost due to power outages that occur away from the insured business. For instance, if a business was spared from physical property damage following a hurricane, but the utility company’s property was damaged, coverage can still be available for the undamaged business in the event it’s unable to resume normal operations due to an offsite utility interruption.
Consider Contingent Business Interruption Coverage
It’s common for businesses to depend on third parties to operate, coverage under a contingent business interruption policy could provide protection in the event a necessary third party fails to live up to its obligations. For example, in the event a manufacturing company depends on another business for materials in order to operate and a hurricane damages that third party, this could directly affect the operations of the manufacturing business and result in a loss of income due to a closure.
Denied, Delayed, and Underpaid Claims
Unfortunately, even if all the qualifications are met to trigger business interruption coverage, insurers can still attempt to deny, delay, or grossly underpay claims. These actions can leave business and commercial property owners reeling after suffering hurricane damage that results in a business closure. Because of this, it’s incredibly important for business owners to consult with an attorney to hold the insurance carriers accountable.
Houston Hurricane Damage Attorney
Business interruption claims are often incredibly complex and can be difficult to understand if one is not well versed in their specific policy terms. Because of these complexities, insurers try to wrongfully deny, delay, or grossly underpay business owners on valid claims. At Raizner Law, we understand just how upsetting this can be for business owners trying to turn a profit. We’ve successfully handled large, complex insurance disputes against every major insurance company. If you’re a commercial property owner and want to determine your business interruption coverage options, contact us today to discuss your needs.