When filing an insurance claim for property damage due to a hurricane, it can be easy to assume that most of your loss will be covered. Unfortunately, however, insurance policies can be incredibly nuanced and exclude coverage for even the most catastrophic damage. Because of this, commercial property owners must understand what is covered under their hurricane insurance.
Hurricane Insurance Coverage
Commercial properties suffer major losses in hurricanes and tropical storms every year. There can be a lot of confusion when it comes to insurance companies covering damage caused by a hurricane. For starters, hurricane insurance consists of multiple policies outside of a standard property policy – typically including windstorm and flood coverage. Even with these policies in place, not all loss amounts will be covered to the same degree or even at all.
There are a few ways hurricane-related damages can be covered through various insurance policies, depending on the property’s location and insurance provider, such as:
All Peril: All peril is the most comprehensive coverage, and insures everything except that which is specifically excluded within the policy.
Named Peril: Named peril coverage will cover only what is specifically denoted in the policy. This is usually less expensive, as it offers far less coverage.
Even though comprehensive hurricane insurance coverage for commercial properties must often be accomplished across multiple different policies in order to address the full spectrum of needs, it is ultimately up to the policyholder to ensure coverage is adequate. To determine this, it’s important to look at what typically is and isn’t covered when it comes to hurricane-related damages.
What May Be Covered
Typically, with combined commercial property, windstorm, and flood insurance policies, business owners should anticipate the following will be covered in the event of a hurricane:
Buildings and Structures: When a hurricane causes property and structural damage, that portion of the loss is generally covered. This includes office buildings, production facilities, and other business structures.
The Contents of the Property: Most standard commercial insurance policies will cover the contents inside of the property, including furnishings, fixtures, computers and electronic equipment, and other items within the interior damaged by a hurricane. Despite this, more specialized types of equipment and property stored in the property may not be covered unless additional coverage has been purchased.
Product Inventory and Cargo: If a business relies on transporting products to consumers, having hurricane-damaged inventory and cargo can be devastating to its bottom line. Because of this, most policies include coverage for inventory and cargo damaged or compromised due to a storm or hurricane.
Equipment and Machinery: Machinery, vehicles, aircraft, tools, and equipment can all be damaged in a hurricane. The coverage for these losses is not always equal. Commercial vehicles can be covered by one policy, while specialized equipment may be covered under another. Because of these discrepancies, commercial property owners must ensure they carry additional coverage for specialized machinery or contractor equipment on the property.
Flood Damaged Property: Under private policies or through the National Flood Insurance Program, commercial property owners can ensure coverage for flood-related property damage.
Business Closures: If a commercial property suffered hurricane damage that left the building inoperable for some time, obtaining a separate business interruption policy can cover the cost of wages, lost revenue, and other overhead and operational expenses. These policies allow business owners to recoup the funds lost due to the premises being inoperable following physical damage usually after a 72-hour interim waiting period.
What May Not be Covered
With just a standard commercial property policy in place, some items may not be covered in the event of hurricane damage, including:
Wind Damaged Property: This is where hurricane insurance can get complicated. Wind-damaged property can only be covered under a windstorm policy. This is true for hurricane-prone areas like Texas, where hurricane and tropical storm strength winds can be incredibly strong and cause mass amounts of damage. Thus, an additional windstorm policy will need to be purchased.
Flooding and Storm Surge: Just like with wind-related damage, flood damage caused by a hurricane can only be covered through the purchase of a separate flood policy. This is also true for any flooding that occurs due to a hurricane’s storm surge.
Mudslides: Certain areas can be prone to mudslide activity after major storms and hurricanes. Unfortunately, mudslides are typically categorized like earthquakes, as earth movement events, which are not covered under a standard commercial property, windstorm, or flood policy.
It’s important that commercial property owners remember that the specifics of each policy can different. Because of this, obtaining the proper coverage for a property can be a complex and cumbersome task. Policyholders should regularly review their commercial, flood, windstorm, and other specialized policies to ensure coverage is available and adequate for all potential losses by consulting with legal counsel.
Hurricane Insurance Coverage Attorneys
When a hurricane threatens a business and its property, business owners may assume they are protected in the event of property damage if they have a commercial insurance policy in place. Unfortunately, this isn’t always the case, as many insurance companies deny, delay, or underpay policyholder claims in bad faith. At Raizner Law, our experienced team of trial attorneys is well versed in the tactics insurers use to pay less than their insured are owed. If your commercial property has been impacted by a hurricane and you need assistance with a claim, contact us today to see how we can help.