5 Coverages You Need in Your Commercial Insurance Policy Before Hurricane Season

Each year property owners in Texas expect the winds from the Gulf of Mexico to blow in from June 1 through November 30, hurricane season. This summer we are expecting to have multiple hurricanes blowing through so it pays to be prepared.  At the hardware stores we can find a shortage of tarps, boards for  windows and  generators as folks prepare for the expected storm season.  

It’s important to protect your property, both inside and out. This post will focus on the 5 things to look for in your commercial property insurance policy before hurricane season. 

1. Wind Coverage 

 If your business is on the Texas coast or in Harris County on Galveston Bay, your commercial property insurance policy more than likely excludes coverage for hail and wind damage. The Texas Windstorm Insurance Association (TWIA) provides wind and hail coverage for coastal businesses. TWIA coverage can be purchased from local insurance agents. If your business is located in a flood zone, TWIA may not sell you wind coverage until you purchase flood insurance first. For TWIA coverage, check out: twia.org or call 800-788-8247. 

2. Inland Marine Coverage 

 Businesses use property that isn’t typically covered in the standard commercial property insurance policy.  To keep Business Use property covered, owners need inland marine coverage.  Inland marine coverage protects business property that is kept inside the business.   Here is a shortlist of inland marine coverages: 

•  Computers 

• Valuable Papers 

• Accounts receivable 

• Contractor Equipment 

• Property held for others 

• Property in transit 

• Fine art 

If you utilize any of the items listed in your business, call your agent and add the coverage.  You will be glad you did. 

 3. Crime Coverage 

 Crime is on the rise so make sure your business is protected.  We can’t avoid being hit by a crime wave, but we can definitely protect our businesses from criminals.  Burglar bars, security systems, alarms and guards may prevent crime, but when it happens, you need your policy to protect you from a significant loss. 

Here are a few crime coverages to consider: 

• Safe Burglary (cracked or stolen all together) 

• Money & Securities (securities that insure the money) 

• Cyber Crime  

• Forgery 

• Employee Theft 

• Document Alteration

  4. Flood Insurance 

 At the top of our list is wind and hail coverage.  Flood insurance may be applicable if your business is located in a flood zone.  Even when you are not in a flood zone, it’s a good idea to consider a flood policy.  Many Texas businesses were flooded during Hurricane Harvey and they weren’t in a flood zone.  Again, better safe than sorry. You have a couple of options for flood coverage.  You can shop around or get flood coverage from the National Flood Insurance Program. For flood insurance coverage offered by the federal government visit: FloodSmart.gov. 

 Please be mindful that there is a 30-day waiting period before your flood policy kicks in. Now is a good time to add it if you don’t have it already.    

5. Business Interruption 

 When disaster strikes, your business can suffer from a temporary shut down. When it’s hard to make payroll, employees can quit if the shut down lasts too long.  If you are a small business owner you need to maximize your business interruption coverage.  Business interruption coverage pays for the money your lose if your business cannot continue normal operations due to damage or closing down. After the global pandemic, insurance companies tightened the coverage on business interruption.  Make sure you read the fine print, a COVID like shut down, may be specifically excluded.   

Step 1: Before we get to the major steps your first step is to confirm that water damage is covered under your insurance policy.

Step 2:  Now that have confirmed coverage, review the policy to find the water events that are covered in your homeowner’s insurance policy.

•  Common covered causes

• Sudden discharge of water (like a pipe burst) no slow leaks

• Fallen Trees on your roof that create an opening during a storm letting water inside.

• Water Damage caused by Storms but no insurance coverage for flood damage.

• Sewer backup  if its caused by accident and not lack of maintenance.

Step 3: Call Your Homeowner’s Insurance Company and file your claim.

Many insurance companies offer automated service to file claims by phone or online.

Step 4:  Call Your Property Insurance Attorney

A property insurance attorney will ensure that your rights under the policy are protected from the beginning.  Insurance companies consistently deny, delay and underpay claims causing more unwanted stress to the homeowner and commercial property owner.  Remember, your insurance policy is a legally binding contract.  Insurance carriers are looking for more ways and legal reasons to deny claims by excluding coverages and making low ball insurance settlement offers that won’t cover the cost of repairs.  Why risk it? Let your property insurance attorney enforce the terms of the homeowner’s insurance contract. 

Step 5: Mitigate the Water Damage Without Doing a Total Repair (Don’t Destroy Your Evidence)

Your property insurance contract has certain requirements that you must undertake to maintain insurance coverage.  You are required to stop the problem from spreading.  Common insurance contract clauses require a Duty to Mitigate the water damage. 

This is why you need an insurance attorney.  The insurance contract does not list the mitigating steps you are required to take.  They require you to take reasonable steps  to minimize the damage. Reasonable by whose standards? The reasonable standard is vague and is an easy way to deny your claims.  

 Some Reasonable Mitigation Methods:

• Shut the water valve off

• Shut the water meter off

• Use Dryers (rentable) to stop the mold (mold is usually excluded) 

• Place a tarp over the opening in your roof where the water is leaking 

Step 6. Once your claim has been filed an Independent Adjuster (IA) or a company adjuster will be assigned to your claim. Here’s what you can expect from experienced property insurance attorneys:

1. Assist with claim management.

2. Prepare you for your Examination Under Oath.

3. Ensure that supplemental settlement payments aren’t unnecessarily delayed, 

4. Attend inspections and re-inspections.

5. Engage an expert to determine the cause of your water damage if the carrier denies coverage.

The insurance companies are known to blame the insured for failing to properly maintain their property.  You will need an engineer to determine whether the damage is due to your failure to maintain the roof or the damage was caused by a covered cause of loss the insurer has to pay for.