Information Release
Contact: Hugh Strawn
630-724-2230
Date: April 10, 2015
Information
for Policyholders with Damage from Spring Tornadoes
Insurance
claim preparation is an important part of the recovery process for all
homeowners, renters, and business owners whose property has been damaged by Spring
tornadoes. “Several types of property
and casualty insurance will be involved in helping to rebuild the damaged
communities following a catastrophe,” said Hugh Strawn, Vice President
Catastrophe Services for the Property & Liability Resource Bureau.
Areas
with Storm Damage in the South & Midwest
Thursday,
April 9 to Friday, May 10, 2015
PLRB
Catastrophe Services Occurrence Tracking Chart
“For the homeowner whose house was
damaged by the tornado, the repairs will be a priority in the weeks ahead,”
Strawn noted. “The insurance policy will help pay for those repairs.”
Some of the basic coverages of
homeowners and renters policies include:
Homeowners insurance pays for
• Wind damage
• Rain damage from
rain entering through a wind- damaged area
• Theft
• Vandalism
• Fire
If these damages occur, the policy pays for
• Emergency repairs to prevent further damage
• Additional Living
Expense
• Debris removal
• Repair or
replacement of the insured property
“Sometimes
a policyholder is confused or unsure of the coverages purchased when the
insurance policy was obtained from the insurance agent,” said Strawn. “It is
important to the recovery process for each policyholder to know what those
coverages are and how they apply to the recovery from the tornado.”
“The coverages may be subject to
limitations” he noted. “But a policyholder may easily determine the insurance
coverages and policy limitations by:
• reading the policies
• calling the insurance agent
• asking the insurance adjuster
Help speed the claim settlement by making a
list of damaged property in each room.
For each item
include:
- brand name
- model number
- Age
- purchase price
- place of purchase
- cost to replace
“Filing the insurance claim needs to be
done as soon as possible,” Strawn said. “Typically after a storm, people with less
than total damage will often wait before notifying their agent or insurance
company. I have seen this occur all over the country,” he continued, “as those
will less damage want to give those with extensive damage priority. But insurers are set up to prioritize those
calls quickly and efficiently and get the claims funds flowing to all
policyholders who sustained damage.”
The following tips on filing the claim
are provided to help people with damage through the claims process.
● Call the insurance agent or company
claim telephone number immediately
● Preserve and protect the
property from further damage
● Save the damaged property until
the adjuster has seen it
● Photograph damaged property for
the records
● Prepare a room-by-room list of
damaged or destroyed property
● Keep an accurate list of all
additional living expenses such as meals, motel rooms, etc.
● Keep an accurate list of all
supplies purchased for emergency damage control
● Leave a forwarding address,
e-mail address, and the telephone number(s) with the agent or adjuster
“Many businesses have been damaged or
destroyed by the tornado,” continued Strawn. “The repairs to commercial space
and business property, compensation for destroyed inventory, and recovery of
lost business income will be a priority for all business owners in the weeks
ahead.”
“The commercial insurance policies, in
cooperation with good management skills, will help businesses survive,” he
observed. “The insurance adjuster will help business owners through the process
of recovery. It is recommended that business owners discuss with their
adjuster, whose professional experience will be of great value to them, the
best way for the business to proceed with its recovery.”
Some of the basic perils the business
insurance policy may cover include damages caused by wind, hail, rain water
entering through openings caused by the storm, fire, and lightning. The business owner should be sure to check
the specific business coverages with the agent or the adjuster. Business
insurance policies typically cover the following:
·
Building ‑
Damages caused to the structure by the disaster, such as to roofing, siding,
windows, and some signs.
·
Contents ‑
Damages caused by the disaster to the business equipment and property, usually
inside or close to the building. This
includes the stock or inventory.
·
Business
Interruption ‑ Replaces the income the business would have generated if
it hadn’t been temporarily shutdown by the disaster.
·
Extra Expense ‑
Provides additional funds to meet emergency costs necessary to keep the
business open and operating following the disaster.
Call the insurance agent, broker, or insurance company
claim telephone number immediately to report how, when, and where the loss or
damage occurred. Be prepared to provide
a reasonably accurate description of damages.
To control damage to the stock
● Dehumidify the stock area after
the building has been made weather tight.
● Separate
the damaged stock from the undamaged stock.
● Contact
a salvor to inspect damaged stock and determine any salvage value.
● Remove all
debris as soon as possible after receiving authorization from authorities and
the adjuster.
● Have
the stock storage area cleaned.
Note:
It may be necessary to move the undamaged stock to another location
during the clean up.
● Consider
making either a public or a limited announcement to customers advising of any
temporary changes being made to continue operations.
If the business owned the building and it is damaged
● Inspect the
building to determine its safety and the extent of damage. Architects, contractors, and building
officials may be of help.
● Board
up the building and cover holes in the roof to make it weather tight and reduce
additional damage.
● Secure
the building from casual entry or post guards.
● Restore
the utilities as soon as possible.
● If
necessary, install a temporary electrical generator.
● Order
a dumpster for debris.
● Use
temporary signs to redirect parking or traffic access.
● Partition
the building if some areas are not usable.
● Locate
alternative location if the building is not usable.
“Keeping the business operating in a
fashion that is as close to normal as possible is crucial to its recovery,”
Strawn said. “While business interruption insurance will pay for the covered
losses, the only chance of surviving and prospering is to keep serving
customers.” Insurance adjusters know from many years of experience in helping
businesses recover from disasters that there are some operational strategies
and emergency recovery procedures to follow as you pick up the pieces.
● If possible, continue conducting business operations as
normally as possible, making business decisions as if there was no insurance
policy. Customers will appreciate a business owners efforts to provide them
continuing service.
● Start
a physical inventory as soon as possible. It may be required by the insurer.
Employees or a professional inventory service may take the inventory. Discuss
with the adjuster various options and get his or her opinion on the best method
for conducting the post‑tornado inventory.
● Organize
the business books and records. The adjuster will need to examine these in
order to evaluate the damages.
● If
portions of the inventory are lost or damaged beyond recognition a "book
inventory" will be needed to evaluate the loss. It is important that any
inventory shipments received or sales made after the disaster is documented
separately from pre‑tornado business.
Business
Interruption Basics
● Extra expense coverage is designed to help the business
continue operations.
● Loss
of income provides for the loss of net profits the business would have earned,
including those expenses that continue during the period of business
interruption.
● Business
interruption is usually activated when the business is directly damaged by a
covered peril such as the tornado at the insured premises.
● Most
policies do not cover losses resulting from interrupted water, electrical, and
natural gas supplies, or telecommunications service, unless the interruption
occurs on the premises.
Expediting the
Business Interruption Claim
● Prepare a list of steps required to promptly resume
operations on a full, or even a partial, basis.
● To
help calculate the amount of business income loss the adjuster will need:
· Historical
sales records
·
Income and
expense information as shown in recent profit and loss statements and/or income
tax forms
·
Other business
records that might assist in projecting what profits would have been had
business not been interrupted.
● Consider
various ways to reduce continuing business expenses. The adjuster will review
this with the business owner.
Things to do
immediately
● Close out the books as of the date of
the loss and maintain a separate, accurate record of any sales or operating
expenses that continue after the loss.
Remember that the adjuster will need to verify these expenses as part of
the claim process.
● Maintain accurate records for
extra expenses incurred to expedite the resumption of operations.
● Create a written record of any
communications received regarding orders to evacuate, including who ordered the
evacuation, date, and time.
Some ways to
reduce loss of business income
● Carefully consider ways to continue business operations,
even if on a partial basis. Consider ways to expedite repairs and replacement
of destroyed inventory.
● Rent
another temporary facility if the current location is not serviceable.
● Enlist
the support of non‑competitor business
associates, if they can help maintain service or supplies to the customers.
● Downsize
the operation if a portion of the building remains serviceable.
● Consider
sending printed materials to customers describing the plan to continue
operations during the restoration period.
● Act
quickly to restore and protect the inventory, but keep damaged property for the
adjuster’s inspection.
The Property & Liability Resource Bureau is
a not-for-profit association of property and casualty insurance
companies. It is located in Downers Grove, Illinois.
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