At A.P. Reid, we consider consumer education to be one of our top priorities. An informed insurance buyer will made educated decisions about their insurance - ensuring that you avoid trouble down the road in the event of a claim. A.P. Reid customers benefit from the important information contained in our series of hundreds of Customer Information Bulletins. Below you will find a selection of these bulletins related to Business Insurance. Check back often as this selection will be updated from time to time.
Many businesses rely on certain weather conditions to have a “terrific month” or a “terrific season”. Snow Removal Contractors and Roofing Contractors often need inclement weather to create a need for their services. Landscaping Contractors need an early Spring. Outdoor employees often can’t go to work when the weather is poor. Lots of people watch the weather forecast hoping for certain conditions that will improve their business or create a need for their services. This bulletin isn’t about desirable weather conditions to maximize business profits. Not having your preferable weather conditions is NOT INSURABLE.
Most weather is simply a nuisance. Some businesses benefit by certain weather conditions, other lose a good day’s receipts because of certain weather conditions. However, certain weather conditions can be so extreme that you actually suffer damage to your building and your contents because of it. This bulletin is written to review the weather related events insured by most insurance policies, as well as the weaterh related events not insurable, or only insurable at an extra premium.
Lightning is a standard coverage that comes with even the most basic of Fire Insurance Policies. If your building is struck by lightning and ultimately catches fire, then the fire damage is insured by most policies. If you carry Business Interruption Insurance, then loss of business income due to the temporary business closure is also covered.
It takes a pretty big wind to cause physical damage to your building. Usually, such winds are called hurricanes or tornadoes. Either way, physical damage done to your building by wind or wind by any other name is insured under every broad form policy and most basic policies. There are some issues to wind driven damage though – roof repairs are insured only for that portion of the roof that was physically damaged by the wind. Subsequent work that might be necessary to the rest of the roof is not covered.
A windstorm can often appear and cause damage with or without rain. If rain is accompanying the windstorm, hurricane or tornado, you risk severe roof damage that now creates an opening for the rain. Basic policies generally do not cover “inside” damage caused by this entrance of rain through the opening. Broad forms of coverage generally do cover the water damage. It’s important to note there are TWO types of rain damage. The type that is never covered is rain that enters through natural openings such as windows, doors, through-doors, under doors, through leaky windows, or windows accidentally left open.
Frequent and heavy rain (with or without wind) can often cause the ground to swell to such proportions that water enters your foundation through sewer and drain pipes as well as through hydrostatic pressure. Backup of hydrostatic pressure is a maintenance issue and not insurable by any insurance policy. Risk of losing stock and equipment stored in a foundation level can be high and costly. Drain backup deductibles are often higher than your regular deductibles.
Coverage for Earthquake, Landslide, and other earth movements is not covered by any regular insurance policy. Earthquake coverage must be purchased as a separate coverage. This coverage can be costly, and generally the deductibles are a minimum of $25,000. Deductibles can climb higher too. Many commercial lenders require that a commercial building owner carry earthquake coverage.
Flood is another coverage that must be purchased separately. Flood, rising waters, can be particularly hazardous to your business if you are located near water. Flood coverage, like earthquake, is a special coverage you must buy. Flood deductibles are higher than your usual deductibles. Flood deductibles generally begin in the $10,000 range. People who are conducting business in the middle of a Flood Zone may not be able to buy private insurance.
Businesses who rely on power (and who doesn’t) have no recourse for lost business w hen weather knocks out the power for a few hours. Many businesses are in such a position that they must close their doors for business for a few hours, costing them a day’s or half-day’s sales. This is a risk of doing business. Nor is the loss of any stock you might have to throw out if the power was out for such a lengthy period of time.
The weight of ice, snow, and sleet upon a roof can cause significant damage to building owners. Comprehensive Commercial Building policies cover collapse of the building. Basic ones do not. Most owners of rural commercial buildings such as garages, sawmill buildings, carpentry storage buildings, etc., only have basic coverage, and therefore do not have collapse coverage. There is also a backing up of ice as it melts that can cause damage to gutters, etc. This is a maintenance issue and is not insurable. All water damage caused by melting is maintenance.
No Client Information Bulletin on the topic of weather would be complete without us mentioning the risks you face as a Commercial Property Owner from lawsuits because your visitors tripped and fell on your inside and outside surfaces. It is critical to maintain your entire premises, not just in the area of preventing damage to your building and contents; but lawsuits from slips and falls as well. You have a duty to do everything in your power to make your premises safe for visitors and tenants.
Older structures that are not maintained do not qualify for Broad Form Policies that give you the very best of the weather related coverages. Weather is one of those events that are particularly hazardous to the building that is aging and is not maintained. The odds are this: If your business is being operated from a building that is aging and hasn’t been upgraded to excellent standards, you have poor weather related insurance. Damage from weather is going to be considered to be a “maintenance waiting for a reason” and not an “insurable weather event”.