With two catastrophic hurricane seasons behind us, we’ve all learned that insurance is not something that should be taken lightly. In fact, with the repeating cycle of hurricane seasons, concern over a repeat of 2005’s Wilma has become foremost in our minds, prompting discussion regarding property valuations, the meaning of certain language in policies, the application of deductibles and coinsurance, and a host of other issues.
Hurricane preparation is not unlike the sports philosophy of “the best offense is a good defense,” and Setnor Byer Insurance & Risk is available to assist insureds in their hurricane preparation.
A critical priority of each insured should be an analysis of their real and personal property values, and discussion of level of protection they need or want. The price of materials and labor has increased dramatically in the past few years, and many insureds are finding that their properties are significantly under-insured. Furthermore, due to a common clause in policies known as coinsurance, which restricts reimbursement for property that is underinsured, it is critical that real property be properly valued.
Commercial insureds need to develop mechanisms to recover or avert business interruptions due to storms and other catastrophic events. Clearly, insurance can be prohibitively expensive if an insured looks to transfer all such risks to its carrier. While interruptions attributed to direct damage to insured property are insurable and generally affordable, the cessation of business from damage to other properties (including overhead transmission lines or water and communications systems) are often uninsurable at a reasonable cost.
Deductibles should also be given some attention, particularly deductibles that are expressed as a percentage of Total Insured Values (TIV), which can cause the multiplication of the percentage by anything from all insured locations, whether damaged or not, to a more limited approach of multiplication by the TIV of a particular building or coverage line.
Debris removal, increased costs of construction due to ordinances, and demolition of undamaged premises is not necessarily standard within insurance contracts. These items need to be discussed more fully. Power surges, spoilage of food, and damage to property due to changes in temperature are all risks that need to be addressed, whether insured or not.
And, what about Flood Insurance? There are some insureds that are falsely lulled into a sense of comfort that their property is not prone to flooding, relying on a federal mapping system that is flawed. Although FEMA has undertaken a massive effort to identify and map high flood zones, the existing mapping system is aged and may not accurately reflect flood hazard conditions. Not only does this potentially create a false sense of security but it also places buildings, infrastructures, and individuals at risk because flood hazards are dynamic and may change rapidly due to community development and natural processes in the watershed. Thus, the peril of flood should be seriously considered.
Insureds who fair well after a catastrophe are those that are prepared, understanding when and to what degree insurance can be a reliable instrument, and what other alternatives are available to finance or limit loss. Here at Setnor Byer we are committed to helping you work past what may be another tumultuous hurricane season.
“After Hurricane Wilma, serious thought and numerous sessions with our service staff and clients revealed a few flaws in our catastrophe response, even with a detailed contingency plan that included satellite communication, remote technology systems, and a 24/7 emergency claims facility in Arkansas. For this reason, we’ve dedicated resources to building an alternative response system in our new Baldwin Park, Orlando facility. Now, more than ever, we are prepared to be there after the storm.”