Disaster Recovery: Protect Your Assets With the Right Insurance
From Carr, Riggs & Ingram
When a disaster of any kind damages a home or a business, the owners’ first reaction may be to reach for something that makes them feel protected. We have compiled a number of insurance policy options that individuals, businesses, or both can purchase to protect themselves from property damages, business interruptions, or other losses due to a disaster. Each of these protection options below varies in their degree and extent of coverage, cost, and claim requirements.
Options to Give You Peace of Mind
When disaster strikes, a first step is to make a list of all types of insurance you have in place to protect your home, place of business, high-cost possessions, or other valuables. Consider what losses you have incurred and what policies may provide coverage. You might look at your automobile policy if your car was damaged, or your life insurance policy if you lost someone to the disaster. Knowing what policies you have, what they cover, and the limits of those policies are extremely important and can be confusing. Types of insurance which can be purchased prior to indications of a disaster include:
- Homeowner Insurance Policy
Homeowner policies generally cover loss to physical structures and personal property damaged by perils outlined in the policy. Damages caused by wind, hurricane, and hail are generally covered (but not always). While often considered a heavy blanket of protection, homeowner policies very rarely cover damages caused by a flood.
- Flood Insurance
Flood insurance typically covers loss to covered structures and limited personal property directly damaged by a flood. Knowing if the damage caused to your property was caused by wind-driven rain or flood water may determine what policy covers your claim. This might be the right level of protection for you if you live in a valley or below sea level.
- Windstorm Insurance
Normally, windstorm insurance covers loss to structures and personal property directly damaged by windstorm or hail. Where you live in proximity to the coast may determine if you must have separate windstorm policy or if it is included as part of your main homeowner’s policy.
- Business Interruption Insurance
Business interruption insurance covers the loss of income that a business suffers after a disaster. Businesses that have to close due to a disaster can lose a tremendous amount of income during the period of restoration and renovation, so while this “specialty blanket” may seem expensive it can cover huge losses and possibly save businesses from failing. To claim business interruption coverage, businesses must provide proof of their losses during the period they were closed. Documenting those losses and disaster-related expenses can be complex. Businesses should strongly consider consulting with their trusted accountants and advisors to ensure they are taking full advantage of this coverage.
CRInsight: Before entering into an agreement or signing a contract of any kind, closely read all of the information, disclaimers, and related documents. Consider seeking help from a CPA, attorney, or other trusted advisor.
Post-Disaster Loan Assistance
The U.S. Small Business Administration (SBA) has created a Disaster Loan Assistance Program. Under this program, the SBA provides low-interest, long-term loans to businesses of all sizes, private non-profit organizations, homeowners, and renters. SBA disaster loans are issued in a declared disaster area. They can be used to repair or replace real estate, personal property, machinery and equipment, inventory and business assets, or for other physical and economic damage caused by a declared disaster. There is an application and qualification process required to obtain these loans. Since SBA Disaster Loans are issued after a disaster, they can be especially helpful to business owners and individuals who failed to pre-purchase insurance coverage or other means of protection.
Get the Most Out of Your Plan with CRI’s Assistance
When filing a claim under any insurance policy you will need to document the damages you have suffered. You could be required to provide data and information, make projections, or deal with insurance adjusters and agents and/or other parties. We understand the complex process behind preparing and filing claims. Contact usto help you get the most out of your protection plan.