Last February, Texas saw one of its harshest winters in history. The storm that ravaged the area caused billions of dollars worth of damage and suffering. From ice, snow, freezing temperatures to heavy rains and wind, the potential for disaster is enormous during harsh winter conditions.

In many ways, the worst affected are the smaller businesses that rely on delivery people, walk-in customers, and other services that are brought to a halt by harsh winters. If predictions are anything to go by, there are high chances of the coming winter being just as harsh, if not worse. In times like these, it becomes imperative for businesses to protect themselves – or face dire consequences.

The Insurance Implications of Harsh Winter Weather

Some of the issues brought about by harsh winter weather include prolonged power outages, property damage due to collapsed roofs and burst water pipes, business interruption caused by property damage, impeded access to the property, power loss, and other public utility services being cut. Prolonged freezing temperatures and accompanying power outages result in damage caused by freezing pipes, fallen tree limbs, heavy ice, sleet, and snow.

Even automobiles can be heavily damaged. Moreover, there are extra expenses incurred to get back to normal operations. Businesses need to understand their insurance resources and maximize any insurance recovery in case they need to make a claim. Winter hazards create individualized losses that are unique to each business. Here’s a checklist of some issues that relate to insurance coverage for these losses.

• One of the most common and expensive causes of property damage is burst pipes due to frozen water. They can cost at least $5,000 to repair.
• Even your outside faucets can freeze over in the winter and develop leaks. They could even split the water line inside your home and cause flooding in your basement.
• Leaves and other materials can clog your gutters and cause flooding. You’ll have to remove obstructions either manually or using a leaf blower.
• Cars and other vehicles are susceptible to damage due to falling branches and other heavy objects blown over by the wind. They can also be damaged by a large amount of snow.
• Electric lines could cause power shortages or short circuits. That could cause your food to spoil, or even start a fire.

Identifying Potential Coverage

The first step is to assess your commercial property insurance policy. This provides insurance on the business assets and insurers issue this coverage under various standard insurance industry policy forms. Some have created tailored policies to meet a policyholder’s particular risk scenario. Assess your specific policy language and the law applicable to your policy. Businesses must have first-party coverage which includes:

Property damage – This policy covers damage to or the destruction of any insured property. That includes buildings and other structures, supplies, equipment, and other personal property. Water damage caused by frozen and burst pipes collapsed roofs, and other such damages would come under here.

Business interruption – That covers the policyholder’s loss of earnings from property damage or loss caused by an insured peril.

Contingent business interruption – this covers the policyholder for losses that include lost earnings and revenue, because of damage to property of a supplier, customer, or some other business partner or entity. That leads to the supplier or customer being unable to provide goods or services, or not being able to take the policy holder’s goods/services. This is typically written to apply when the policyholder’s property hasn’t been damaged.

Attraction property coverage – This applies when a hotel or a restaurant suffers income loss due to damage to a designated ‘attraction property’ like a nearby landmark that attracts tourists.

Extra expense coverage – this covers the policyholder for certain extra expenses incurred due to a loss, to get back to normal operations to the extent possible, and to mitigate other losses.

Ingress and egress coverage – this covers the policyholder when access to business premises or location is prevented for some time. If the access roadway leading to the policy holder’s business has broken down.

Civil authority – this helps when a governmental authority issues an order that interferes with normal business operations. This can also apply when there’s no physical damage to the owner’s property.

Service interruption – this covers the policyholder for losses related to electricity or other power supply interruption. This is written to require the outage to be a result of a damage event to the utility provider’s equipment that’s within a certain distance of the policyholder’s property.

Advance payments – this is often required under the terms of a commercial property policy. That works even if the full extent of the insured loss is still under investigation and adjustment. Such advance payments can be important when a business cannot afford an extended adjustment period before receiving funds for repairing the property, or to replace an income stream.

Claim preparation – generally covers the policyholder for the costs related to compiling, supporting, and certifying a claim.

This winter, prepare yourself for a safe season by ensuring you’re insured! Connect with us to know more.