Utilities and local governments up and down the East Coast are preparing for Hurricane Sandy. Are you ready if this pre-Halloween storm wreaks havoc on your business operations and property? Knowing your coverage rights and obligations will help you weather "Frankenstorm."
Policyholders should locate and analyze all insurance policies that may afford them coverage. Property damage policies cover physical damage to property including, for example, a policyholder's building. These policies also may cover the costs associated with rebuilding, repairing, or replacing damaged property. Business interruption, extra expense, and contingent extra expense coverage may provide further relief when a policyholder's and/or its vendors' or suppliers' damaged facilities cause a suspension of operations.
Policyholders should identify and obtain copies of policies issued to other businesses - such as vendors, current and former affiliates, and suppliers - that may provide insurance coverage to them.
As with any potentially insured losses, issues may arise regarding the cause of the loss, whether the policy excludes the loss, and what coverage limits apply to the loss. Some policies provide specific coverage for weather-related losses; others specifically exclude flood and related losses; and still others provide limited coverage with dedicated sublimits.
Most insurance policies require an insured to provide timely notice of potential claims. Some property policies, for example, require that businesses provide notice of a loss "as soon as practicable," while others require notice "immediately." Most property policies also require policyholders to submit "proofs of loss" arising from covered losses. Businesses, therefore, should collect and maintain records documenting their damage, lost revenues, and additional expenses and be sure to submit all required information as and when required by their insurance contracts. To the extent a policyholder needs more time to prepare its proof of loss, it should consider approaching its insurers for additional time and confirm all extensions in writing. Policyholders also should consider, depending on the extent of loss suffered and their financial needs, asking insurers to make advancements on loss payments during their investigation of extent of the loss.
Because insurance companies fill their policies with legal and technical jargon, policyholders understandably may have questions regarding the scope of coverage available to them. Businesses should consult with experienced professionals, such as insurance brokers, accounting consultants, and coverage counsel, who can help them understand their insurance, navigate the claims process, and ultimately maximize their insurance recovery.