Posts Tagged ‘natural disaster recovery costs’

5 Business Insurance Gaps To Patch Before Disaster Strikes

From a family-owned winery to a growing startup in Silicon Valley, it can be difficult enough for a company to keep up with the daily demands of running a business, let alone remember to update their insurance.

As a result, businesses tend to overlook certain areas of insurance coverage. The beginning of the year is a great time to review your policy and ensure your business is protected. As those policies are reviewed, here are five things for business owners to consider:

1. Business Income Coverage

Should something happen to your business, you may think you’ll close up shop for only a week or two. Unfortunately, business owners tend to overlook or underinsure for this type of protection. While property insurance covers the physical damage to a structure, business income coverage covers the additional costs caused by a business interruption. The coverage is designed to be applicable for all businesses, in order to put a business back in similar financial position prior to the incident.

For example, consider natural disasters, such as wildfires or severe winter storms. Monterey County witnessed this last summer with the devastating Soberanes fire, cited as the most expensive wildfire in United States history. Powerful winter storms have flooded the region already this winter while heavy snow hit the Sierra Nevada and triggered an avalanche just west of Lake Tahoe. And that’s just the short list.

When damage occurs from these instances, reconstruction or repairs can take much longer than expected due to stretched resources. Your business needs to be covered for that loss of time and lack of income. Consider permit acquisition, municipal building inspections, and supply and contractor availability. This must all be considered, when insuring for loss of income.

2. Building And Ordinance Coverage

Business owners who own and operate older buildings, this one is for you. While it’s easy to underinsure or disregard this coverage, it’s a good idea to reconsider. Depending on the age of your building, municipal building codes can require extensive updates to an entire building even if only a portion is damaged. For the best protection, and to avoid additional out-of-pocket expenses to rebuild, you should add the cost of updating the entire building when you purchase insurance.

3. Umbrella Coverage

Business owners should consider umbrella liability coverage to add an extra layer of protection. The umbrella of liability is essentially a safety net in the event of a large claim and when your existing policies require extra limits to cover the unforeseen costs. Usually for only a fraction of the cost of the package or auto policy, you can extend their liability coverage dramatically by adding this. The coverage provides extra protection, and can be tailored to the needs of different business types.

4. Business Name Change Or Reorganization

When a business undergoes a name change, rebrand or reorganization, it’s important to update the insurance policy to reflect those changes. For example, what if your company transitioned into a limited-liability corporation? Insurance updates will ensure that entity is included for liability coverage and that any checks issued to cover damages are made out to the correct entity. Otherwise, there could be a significant delay in your benefit provisions.

5. Review Your Policy Ahead Of Each Renewal

A best practice for business owners is to review and renew their insurance policy 90 days prior to the start of the next term. Companies should have an established process in place, and maintain a strong relationship with their insurance agent to ensure their policies are updated. The agent should understand the nuances of what makes your business tick and what you need to protect it.

As with any type of insurance, business insurance is there to protect your business for the unexpected. Work with an agent who knows your community and industry, someone who emphasizes personalized, local-decision making and expertise. By doing this, you can have the confidence to take on the challenges of your daily business and hopefully — with more peace of mind.


Source: North Bay Business Journals

New Approach Calculates Benefits Of Building Hazard-Resistant Structures

Hazard-induced maintenance costs can be significant over the lifetime of a building.

Researchers at the MIT Concrete Sustainability Hub (CSHub) are developing new methods to calculate the benefits of investing in more hazard-resistant structures. Jeremy Gregory, executive director of the CSHub recently presented one metric, the CSHub’s Break-Even Hazard Mitigation Percentage (BEMP), to officials in Florida and Georgia — states that can see millions in property damage due to hurricanes.

“The BEMP evaluates the cost-effectiveness of mitigation features for a building in a particular location by factoring in the expected damage a conventional building designed to code would endure over its lifetime, and comparing it to a more resilient, enhanced building design,” says Gregory. “In areas prone to natural disasters, more spending on mitigation is justified — the BEMP helps to identify how much extra spending is recommended.”

The southeastern United States was hit hard by weather patterns resulting from Hurricane Matthew in October. Georgia has sustained some $90 million in insured losses to date, and total claims are expected to rise. Florida was spared Matthew’s worst effects, but the state is regularly witness to the destructive power of such storms and there’s a lot at stake: The insured value of residential and commercial properties in Florida’s coastal counties now exceeds $13 trillion.

Gregory spoke to officials and members of the building community in Atlanta, Georgia, and Tallahassee, Florida, this month during roundtable discussions about building resilience, the BEMP, and hazard mitigation. He also presented the topic to journalists and industry professionals during a recent webinar.

“Structures in coastal areas states like Florida and Georgia are prone to damage from high winds and hurricanes,” says Gregory. “Through previous case studies we’ve demonstrated that investing in more hazard-resistant residential construction in some locations can be very cost-effective, especially in costal states where the impact of hurricanes can have devastating economic effects.”

One case study showed a BEMP of 3.4 percent for in the coastal city Galveston, Texas, meaning for a $10 million midrise apartment building, $340,000 could be spent on mitigation, and costs would break even over the building life. The highest BEMP calculations are in cities in southeastern Florida, where the values are approximately 8 percent.

Too often, building developers make decisions about materials or building techniques to keep initial costs down. Although the resulting structures are built to code, those codes often fail to factor in the long-term costs or impacts on future owners and communities. One of the goals of this research is widespread adoption of codes and standards that incorporate hazard mitigation into building design.

“Hazard mitigation efforts offer benefits to society at large,” says Gregory. “Builders or short-term owners might have to invest more up front, but — by decreasing recovery costs and lessening the impact on lives — insurance agencies, taxpayers, and future occupants benefit in the long run. Because of these long-term benefits, this is a concept that it makes sense for state officials to get behind.”


Source: MIT News