Natural disasters have shifted in the cultural mindset due to both increasing frequency and increasing intensity. We now live in an era where natural disasters, formerly unthinkable events which happened to other persons or places, are now seemingly common place, affecting individuals both at home and abroad. The residents of the Eastern Seaboard are experiencing this now more than ever.
In the wake of Superstorm Sandy homeowners and business owners alike are left wondering if they are going to recover any of their losses and damages from their insurance carriers. While recovery is governed by the specific terms of the insurance policy in place at the time of the loss, there are many different buckets of potential recovery under any given policy.
The following is a brief summary of some of the many buckets of coverage available under commercial and residential insurance policies. If you are not certain of your insurance benefits or, if your insurer denies coverage, it is important to ask an expert in policy interpretation to ensure you are not walking away from money.
Flood/Property Damage: Whether the damage to your property, i.e. building or residence, is covered is dependent upon the type of coverage provided and the type of damage. While it is anticipated that many insurers will argue that all of Superstorm Sandy’s damage is “flood”, such a claim may not be true. Coverage for wind damage as well as wind driven rains which enter the premises may exist under the Policy. Moreover, while the word “flood” may be used generically by the general population to describe an event, it is entirely possible that what happened in your particular set of facts is a covered event under your policy.
Personal Property and Business Personal Property: Similar to the coverage for property damage, whether coverage for damage to personal property and/or business personal property exists will be determined by the specific terms of the insurance policy at issue. In the event that the personal property was damaged as a result of a covered loss, an insured should be entitled to recover benefits for their personal property and business personal property losses and damages. Notify the insurer immediately and quantify and/or photograph your damaged property.
Business Interruption Coverage: Generally it provides insurance against suspension of operations for a business where, in the wake of a loss, the insured is unable to conduct business. Though there is a variety of triggering events for business interruption coverage as well as differing scopes of such coverage, generally it is designed to bring a business back to the same financial position it would have been in if no loss had occurred. Depending on the scope of the business interruption coverage under a particular policy, coverage may also be afforded for lost profits, fixed operating expenses and other costs still being incurred by the property, extra expenses for moving to, and operating from, a temporary location, and reasonable extra expenses.
Contingent Business Income Coverage: Provides coverage for loss in the net earnings of a business where a supplier business, subcontractor, manufacturer cannot operate or supply goods because of loss or damage. Such coverage is essential for businesses who are heavily dependent on suppliers or subcontractors, where interruption of the flow of materials from the supplier substantially impacts your business.
Trade Disruption Insurance: Is geared to help when a company’s supply chain is disrupted, but there is no damage to either the insured’s property (a necessary element to business interruption) or a third party’s property (a necessary element to contingent business interruption). This type of coverage is fairly new and is meant to fill the gap of risk transfer when there is a slow down or disruption in a company’s supply chain.
Flood Insurance: Denotes the specific insurance overage against property loss, including personal property or business personal property, from flooding, as defined by the policy. Most private insurers do not insure against the peril of flood, and specific policies for flood need to be purchased through a private primary flood insurer or through an insurance company that acts as a distributor for the National Flood Insurance Program (NFIP).
Alternative Insurance: It is also possible that coverage may exist under the insurance policies of another entity with whom your business has contracted. It is important to take stock of your business contracts and their insurance requirements and if there is a potential of coverage, notice should be provided to the insurer regarding your loss.