By now you’ve probably seen countless news stories and videos pertaining to the catastrophic damages from weather events that have challenged many parts of the United States. Combine those disasters with the severe storms that have already taken place earlier this year, along with the upcoming hurricane season, and it’s evident that storm preparedness is a critical requirement for business owners.
Storm Statistics and Predictions
Most observers agree that 2012 has already been unique weather wise. AccuWeather Senior Meteorologist Dan Kottlowski described the season by saying, “With a lack of cold air in the Deep South this winter, the Gulf of Mexico waters remained unusually warm.” A persistent southerly flow frequently drew warm, moist air from the Gulf, and, combined with the strong jet stream, both necessary ingredients for violent thunderstorms and tornadoes were created.
More recently, a diminishing La Niña pattern allowed the corridor of tornado-producing thunderstorms to shift farther west, compared to last year. This resulted in an earlier-than-normal severe weather pattern, which is borne out by the preliminary tornado numbers already reported for 2012. From January through March, 383 tornados were reported with 223 in the month of March alone. Compare that with the previous three-year average of 124 tornadoes from January through March and an average of 74 in the month of March, and you can see how this three-month activity compares with the overall numbers for the past few years.
The Atlantic hurricane season typically extends from June 1 through November 30 each year. The 2012 hurricane forecast is for near-normal activity in the Atlantic Basin with another big storm possible for the East Coast including potential heavy flooding from rain.
Armed with these preliminary predictions for the storm year ahead of us, the importance of planning for storm season becomes more evident.
MiniCo recommends completing a pre-storm analysis now in preparation for severe storms, tornadoes and hurricanes depending on the geographic location. Some of the recommendations will apply to all business owners, while some are applicable to select locations. Being prepared is the key. Hopefully the following suggestions will help your clients plan ahead to protect their properties, employees, customers and family during severe weather.
Locate all insurance policies and ensure that they are kept in a place where storm activity will not likely affect them (safety deposit box, relative’s home, etc.).
Make note of the names, addresses, phone numbers and policy numbers for each policy and keep the list on your person.
Keep contact numbers for the local authorities such as the police/sheriff, medical facilities, utilities, and emergency contacts.
Have a place of safety and an emergency plan in place for employees and family.
Have a safety plan in place with emergency supplies in case an evacuation warning goes into effect.
Keep cell phones and flashlights fully charged at all times.
Coverage Review & Considerations
In communicating with our insureds, MiniCo emphasizes the importance of working with an insurance agent to review the coverages available on all policies, particularly property-related policies. The coverage review offers an opportunity to ensure that storm-related exposures are included the coverages and that the policy reflects appropriate property values.
MiniCo offers several important coverages and endorsements that provide benefits specifically related to storm damage.
Cosmetic Loss Limitation Endorsement – For self-storage risks in Arkansas, Colorado, Kansas, Missouri, Nebraska, Oklahoma and Texas, MiniCo offers a cosmetic loss limitation endorsement, which provides a premium credit for facilities in specific locations and limits coverage for cosmetic hail damage to a metal roof. The endorsement does not limit coverage as it pertains to cosmetic hail damage to roll-up doors, siding, downspouts and gutters. Hail damage to the roof resulting in the failure of the metal roof covering to perform its intended function of keeping out the elements also is not affected by this endorsement.
Deductible Waiver – MiniCo also offers a deductible waiver option for self-storage risks in Arkansas, Colorado, Kansas, Missouri, Nebraska, Oklahoma and Texas. This option waives the deductible upon mutual agreement between MiniCo and the insured to choose elastomeric roof coating in place of roof replacement for damage caused by wind or hail.
Systems Protection – Systems protection is an option that provides coverage for losses to items such as heating and cooling equipment, computer systems, surveillance equipment, electronic gates, phones and other systems due to events like artificially generated electric current, power surge and mechanical breakdown.
Fire Department Service Charge – This included coverage would cover the actual loss sustained if a local fire department charges a fee to respond as well as the cost of recharging fire protection systems up to $10,000.
Debris Removal – Storms can leave behind a large amount of debris. MiniCo’s debris removal coverage provides additional coverage up to $25,000 per location to cover the expense of removing debris of covered property caused by a covered cause of loss.
Valuable Papers and Records – Valuable papers and records coverage is included in MiniCo’s policy at no additional charge and provides up to $25,000 for the cost to research, replace or restore the information lost as a result of direct physical loss. Coverage can be increased up to $250,000.
Business Income (Business Interruption) – Business income coverage can be a significant factor in whether a business survives a catastrophic event. MiniCo’s policy provides coverage for a full 15 months of business income and extra expenses incurred, with up to 180 days of payment following reconstruction while spaces are being re-rented. Coverage may be extended for actual loss incurred to 18 or 24 months.
Building Ordinance (Building Law) – Building ordinance coverage offers protection in the event that facility structures are damaged to the extent that local building codes or ordinances require that the remaining structure be altered or demolished and rebuilt to meet current building codes. Without this coverage at an adequate limit, self-storage business owners face a potentially catastrophic financial exposure in the event of a triggering incident.
It appears that frequent and severe storms have become a way of life these days, and planning ahead for these events is a critical part of risk management for any business. Careful consideration of insurance coverages is a key element in protecting your self-storage clients from potentially catastrophic losses following a storm.
Don Sedlacek is Vice President of Claims for Phoenix-based MiniCo Insurance Agency, LLC. MiniCo is a full-service managing general agency offering multiple specialty property and casualty insurance products for a variety of unique industries and exposures including self-storage, fine art and collectibles and agribusiness. For more information, visit www.minico.com