November 13, 2017
KNOW HOW

How to manage business losses after severe weather

Joel Makhluf is a vice president at Needham insurance software provider Enservio and the director of the Property Innovation Summit. Contact him at jmakhluf@enservio.com.

In the aftermath of a severe weather event such as a super storm, blizzard, or simple acts of nature like roof collapse from a tree, businesses face the unenviable prospect of securing their premises, counting the costs of property damage and business interruption, and trying to rebuild. This is no easy task. Industry experts have estimated that the cost of Hurricane Harvey could top $100 billion and Hurricane Irma could end up costing $300 billion.

The first step is to ensure the safety of employees, the public, contents and premises. Take any reasonable steps you can to reduce the interruption to your business and secure your data and stock against further losses. Temporary repairs can prevent further damage to business premises and contents, and prevent injury to employees and members of the public. Make sure to obtain quotes from reputable tradesmen and document all the damage before conducting temporary repairs. And it's smart not to authorize any permanent repairs until your insurer gives the go ahead.

Swift, effective communication

In the aftermath of a disaster, communication is key. Contact your insurer as soon as possible. Claims will probably be handled on a first-come, first-served basis. Contact your employees to ensure they're safe, warn them of any business closures in advance and enlist their support in contacting others. Reach out to your customers and suppliers. People are generally understanding about delays and service disruptions, provided you keep them informed.

Proactive planning and documentation

Be proactive in considering potential losses. Can you move stock to a more secure location? Is it possible to reroute deliveries to keep your supply chains open? Do you need to secure your property against unauthorized entry? Don't dispose of damaged stock or contents until you get the okay from insurers.

Keep detailed records on everything, including receipts for all repairs and documentation to support any claim for damage and business interruption. If possible, take photographs.

Coverage and claims

Check the coverage provided by your insurance policies. Even if you don't have coverage for flood damage, you may still be covered for damage caused by high winds, such as damage to a roof caused by tree branches. Damage to vehicles may be covered under your auto policy.

Few are aware the Federal Emergency Management Agency does not offer financial support to a business in cases of losses stemming from a presidentially declared disaster, but it can provide helpful advice. If you have no insurance, or partial coverage, and you have registered with FEMA, you may able to apply to the Small Business Administration for a low-interest loan to cover operating expenses and financial obligations. Loans are only offered if you are unable to get credit elsewhere, so contact your bank and any other sources of credit to see whether they can extend further credit or agree to defer payments.

Business losses after a hurricane can be devastating, but if you act decisively, keep effective lines of communication open, document everything, and work with your insurer, you can weather the storm and get your business back on track swiftly.

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