Irene Losses Largely Uncovered

Hurricane Irene could take a huge financial toll on eastern seaborad businesses, since insurance proceeds won't fully cover the physical damage or the revenues lost by firms forced to temporarily shut down and dean up, experts said in a report by Insurance News Net.

Irene is putting the spotlight on business interruption insurance, said Michael Jackson , director of marketing for the Newark law firm Podvey Meaner. "Some businesses have it as part of their regular business coverage, but some don't," and all companies should revisit their policies.

Insurance may ultimately cover less than 40 percent of the estimated $7 billion to $10 billion in damages from Irene, according to Maryland-based Kenetic Analysis Corp. Experts said floodwaters reached many properties outside flood-prone areas that don't have flood insurance.

The business insurance issues are complicated, said Richard Sobel , senior vice president of insurance brokerage Cook, Hall & Hyde, in Fair Lawn. He said firms located in high-hazard flood zones may choose, or have the financial obligation, to purchase federal flood insurance, which he suggested provides limited coverage compared to a regular "all-risk" property insurance policy that includes flood coverage.

For example, the federal flood policy's valuation for a loss is "actual cash value" versus a good commercial property contract, where the adjustment is made on replacement cost, Sobel said. And the federal flood policy does not include business interruption protection. A business that's not in a high -hazard flood zone may be able to purchase commercial flood insurance through their commercial property insurer. These policies typically have higher déductibles; however, the limits and coverage typically are superior to federal flood insurance, he said.

Sobel said there is strong evidence that Irene will result in "relatively significant uninsured financial losses, because so many factors come into play, like the true impact on lost business incomes. The thought of how many weeks or months these retail or other commercial businesses may be shut down, and both the financial damage to those directly affected and even those businesses in the surrounding dry areas, is staggering."
How to be There for Clients When Business is Interrupted

In times of natural disasters- i.e. tornado, storms and lightning, wildfires, earthquake, - being there for your clients can be both a tremendously great feeling and a boon for your business in regard to future referrals. In the insurance business, reputation is so vital, being a beacon of help and hope can lead to tremendous success.

One terrific means to do this is to be pre-emptive and create relationships with the disaster recovery team leaders in advance and get their insights on how to help in the claims process. Insureds call us when they've had a negative event, they rarely call or seek help when things are going well so the time to shine is when their lives are in havoc.

Part of that relationship building with the disaster response teams at the insurer, is getting to know the disaster claim process up front. When the disaster hits it is going to be extremely difficult and frustrating to get the answers your clients need. Some key elements of this would include:

Understanding the temporary housing process:

    Knowing the timeframes for "typical" disaster claim responses,
    Understanding what debris can be removed and how and what needs to stay until it is reviewed, and
    Knowing your insurer's appeals process and appropriate steps

Conclusion

Business interruption is definitely one of the most stressful times for any business owner; every day lost is potentially costing them thousands and putting the viability of the business itself in serious jeopardy. Add in the fact that business owners employ others, often dozens or even hundreds of others, and the stress of business interrption can be life-altering. For a few the stress could lead to dire personal health consequences. Providing resources to relieve that stress can make the insurance agent/ consultant a hero to them. Be there, in every way you can.