Hurricane season is a reality for businesses across Florida. A major storm can damage buildings, equipment, inventory, vehicles, and other property. It can also force a business to close temporarily, interrupt operations, and create significant financial losses.
Preparing before a storm arrives can give your business a better chance of recovering quickly.
Insurance is an important part of that preparation, but understanding what your policy covers is just as important as having a policy in place.
Hurricane Risk Is More Than Wind
When people think about hurricanes, wind damage is often the first thing that comes to mind.
However, a hurricane can create several different types of risk, including:
- Wind damage
- Heavy rain
- Flooding
- Storm surge
- Roof damage
- Falling trees and debris
- Power outages
- Water damage
- Damage to equipment and inventory
- Business interruption
These risks do not necessarily fall under the same insurance coverage.
For example, commercial property insurance may provide coverage for certain types of storm-related damage, while flood damage generally requires separate flood insurance.
Understanding these differences before a storm occurs is important.
Review Your Commercial Property Coverage
If you own or operate a business in Florida, review your commercial property insurance before hurricane conditions become a concern.
Depending on your policy and business, property coverage may apply to things such as:
- Your building
- Business personal property
- Equipment
- Furniture
- Inventory
- Certain outdoor property
However, coverage is subject to the specific terms, conditions, limits, deductibles, and exclusions of your policy.
Do not assume that every type of hurricane-related damage is automatically covered.
Understand Your Hurricane Deductible
Florida property policies may include a hurricane deductible that works differently from a standard deductible.
Instead of being a fixed dollar amount, a hurricane deductible may be calculated as a percentage of the applicable insured property value, depending on the policy.
For example, a policy with a 2% deductible could result in a substantially different out-of-pocket expense than a policy with a $2,500 deductible.
Make sure you understand:
- Whether your policy has a hurricane deductible
- How the deductible is calculated
- When the deductible applies
- How much you could potentially have to pay after a covered loss
Knowing this before a storm can help you avoid unpleasant surprises after a claim.
Flood Insurance Is a Separate Consideration
One of the most important things Florida business owners should understand is that standard commercial property insurance generally does not cover flood damage.
Flooding can occur from several sources, including:
- Storm surge
- Heavy rainfall
- Rising water
- Overflowing waterways
- Poor drainage
- Coastal flooding
A business does not have to be directly on the coast to experience flood damage.
If your business is located in an area where flooding is a concern, ask whether separate commercial flood insurance should be part of your risk management plan.
Consider Business Income Coverage
Physical property damage is not the only financial risk a hurricane can create.
Imagine your business suffers covered property damage and you cannot operate for several weeks while repairs are completed.
You could lose revenue while continuing to have expenses such as:
- Rent
- Utilities
- Loan payments
- Payroll
- Insurance
- Other ongoing operating expenses
Business income coverage may help address certain financial losses resulting from a covered interruption.
The coverage has specific requirements, limits, waiting periods, and conditions, so it is important to understand how it works before you need it.
Protect Your Equipment and Inventory
Before a storm, take reasonable steps to protect your business property.
Depending on your operation, this could include:
- Moving equipment away from windows
- Securing outdoor property
- Protecting important inventory
- Raising vulnerable items off the floor
- Backing up important computer data
- Protecting documents from water damage
- Following manufacturer recommendations for securing equipment
These precautions may help reduce the severity of a loss.
Your insurance policy may also require you to take reasonable steps to protect covered property from further damage after a loss.
Create a Business Continuity Plan
Insurance is only one part of hurricane preparedness.
A business continuity plan can help you determine what to do if your normal operations are interrupted.
Consider identifying:
- Alternative work locations
- Backup suppliers
- Emergency contacts
- Important employee information
- Critical business documents
- Data backup procedures
- Customer communication methods
- Vendors and contractors who may be needed after a storm
Having this information organized before an emergency can save valuable time.
Keep an Updated Inventory
Maintaining records of your business property can make the claims process easier after a loss.
Consider keeping an inventory of:
- Equipment
- Electronics
- Furniture
- Tools
- Inventory
- Machinery
- Other valuable business property
Photographs, receipts, invoices, serial numbers, and other documentation can be useful when establishing what was damaged or lost.
Keep important records somewhere they will not be destroyed along with the property they document.
Review Your Policy Before the Storm
The worst time to discover a coverage gap is after a hurricane has damaged your business.
Review your policy before a storm and ask questions about anything you do not understand.
Some important questions include:
- What property is insured?
- What types of storm damage are covered?
- Do I have a hurricane deductible?
- Do I need flood insurance?
- What happens if my business cannot operate?
- Are my coverage limits still adequate?
- Are there important exclusions I should know about?
- Are my equipment and inventory properly insured?
Your answers may reveal areas that need further discussion with your insurance professional.
Preparation Can Make Recovery Easier
No business owner can prevent a hurricane from occurring, but preparation can reduce the potential impact.
Protecting property, backing up information, creating a continuity plan, understanding your deductibles, and reviewing your insurance coverage are all important parts of preparing for hurricane season.
The goal is not simply to have insurance. It is to understand how your insurance is designed to respond when your business experiences a covered loss.
At Nieves Insurance Group, we help Florida business owners explore insurance options for their businesses and properties.
Coverage availability, eligibility, terms, conditions, limits, deductibles, and exclusions vary by policy and insurance company.
