Commercial Property Claims Storm Damage / Wind / Hurricane – Including Business Interruption
In 2017, Hurricane Irma battered Florida bringing widespread business losses again to Port Saint Lucie. The last year of major wind losses had been some 13 years earlier from Hurricanes Jeanne and Frances. Hurricane Irma produced billions of dollars of commercial property losses. The Florida Office of Insurance Regulation found the Port Saint Lucie area to be a heavily affected by hurricane claims with roughly 17,000 hurricane insurance claims in Saint Lucie county and Martin County combined.
Commercial Property Insurance Damage Claims from Storm Damage – Wind Damage – Hurricanes
Commercial property insurance (historically known as Fire and Allied lines) protects a business owner from losses to non residential real property and to business personal property. These can be both direct losses (store burns down in a fire) and indirect losses (loss of business income that results from store being closed for repairs due to fire). A hurricane claim like the claims resulting from Hurricane Irma can produce both direct and indirect losses.
There are eight (8) main coverage forms to consider when speaking of commercial property insurance coverage:
Building and Personal Property Coverage
This is the insurance that covers your building and business personal property against damages from causes like fire windstorm (hurricane claims), hail, vandalism, sprinkler leakage, etc.
Builders Risk Coverage
Builders Risk is similar to Building and Personal Property Coverage but is used to insure buildings against losses while they are under construction.
Business Income Coverage
Business Income Coverage protects against losses of income resulting from damage to covered property from a covered cause of loss like a Hurricane or fire claim. These can be complex claims and are discussed in more detail below.
Extra Expense Coverage
Where Business Income replaces the lost profits, some businesses, due to their nature, would suffer irreparable harm which would kill the business for good. These kinds of businesses, to survive a claim like a Hurricane or Fire Claim might need to immediately relocate or contract the work to others. Extra expense is discussed more below.
Legal Liability Coverage
If your business takes the property of others into your care, custody and control in the course of your business, this cover protects you when you damage their property due to your negligence.
Condominium Association Coverage
Similar to Building and Personal Property Coverage but is used to insure buildings and personal property of a business condominium association
Condominium Commercial Unit-Owners Coverage
Similar to Building and Personal Property Coverage but is used to insure buildings and personal property of a business condominium unit owner
Leasehold Interest Coverage
Protects a business from loss of a favorable lease when there has been damage to the premises by a named peril
Business Interruption Insurance
The general purpose of business interruption insurance is to cover the property owner for losses during the period of business interruption for what the business would have done had no interruption occurred. For example a business may have a store, shop, office, or warehouse where they conduct their operations. A hurricane or a fire could result in severe damages to the premises meaning that there will be a “slowdown” or even a temporary suspension of business. In this case while the Building and Personal Property Coverage will pay for the cost to repair and restore the building, in the meantime there will be a loss of income due to the slowdown or temporary suspension and business interruption will cover this loss. Business interruption claims can be complex and often involve forensic accounting. An experienced insurance claim lawyer can assist in insurance disputes concerning business interruption insurance.
Physical Loss or Damage Requirement
Under many policies, for business interruption cover to exist, the interruption must be caused by physical loss or damage to the property of the insured. In Business Income Insurance claims sometimes the issue of physical loss or damage can be tricky. For example, when food spoils as a result of not being kept at the correct temperature due to a power outage resulting from a windstorm, an insurance company might try to argue that there is not any cover because the food was not directly physically contacted by the windstorm. Whether loss of computer data is a physical loss is also an area that can be difficult. An experienced Claims lawyer can analyze the laws to put the best insurance claim forward for payment.
What is Extra Expense Coverage?
While Business Income coverage replaces the lost profits, some businesses, due to their nature, cannot suffer a prolonged interruption. For example a manufacturer may have to pay extra to expedite products and parts from alternative suppliers in order to meet orders and hang on to long term contracts. Or a business may have to dramatically expand operations at another plant or hire additional temporary staff to handle increased workload or use human labor to perform work that was previously being done by damaged machines.
The Period of Restoration
Under most newer ISO forms, the “period of restoration” typically begins either 72 hours after the time of any direct physical loss or damage that triggers business interruption coverage or immediately after the time of any direct physical loss that triggers extra expense coverage. Some forms incorporate a defined “waiting period” which is usually a certain number of days.
The “period of restoration” typically ends on the earlier of: 1) the date when the property should be repaired/replaced with reasonable speed and similar quality; or 2) the date when business is resumed at a new permanent location.
How Much is the Recovery Under a Business Interruption Policy?
The amount that may be recovered under a Business Interruption cover will depend on a number of factors. One of the most important factors is whether the policy is a “valued” policy or an “open” policy. Valued policies are less common, though in certain sectors (such as loss of earnings related to Ocean Hull & Machinery) they can be common. With a valued policy, the calculation is much more easily made, but it is possible that the agreed value may be quite different than the actual loss. For this reason insurance companies do not favor valued policies.
It is more likely that the insurance policy is an “open” policy. In an “open” policy, the insured’s “actual loss sustained” during the period of indemnity is the measure of recovery. The “actual loss sustained” is typically defined as the reduction in earnings less normal charges and expenses that do not continue during the interruption of the business, plus continuing expenses.
WE’VE GOT YOUR BACK!
When your business property has been damaged and your business interrupted due to a Hurricane or other severe storm, there are few more difficult or stressful times. You will have continuing expenses that you still must pay even though the revenue has disappeared or significantly reduced. The insurance company will probably have an experienced claims adjuster or an expensive attorney on their side. They might try to lowball your losses and hope that you will quit fighting and accept less than you are entitled.
Todd C. Passman, P.A. handles Hurricane and Storm Damage Commercial Property Insurance Claim cases serving Fort Pierce, Port St. Lucie, Vero Beach, Stuart, and Okeechobee, Florida, and surrounding areas.
Tell us about your problem. We can help.
If you have a Hurricane or Storm Damage Commercial Property Insurance Claim or have questions please contact Todd C. Passman today, at (772) 465-9806 or fill out the contact form on this page. Someone from our office will contact you right away.