The Maritimes are recovering from the damages suffered as a result of Hurricane Dorian, which approached the region as a Category 2 hurricane on September 7, 2019. Many residential and commercial customers lost power in the area including over:
- 350,000 in Nova Scotia
- 55,000 in New Brunswick
- 50,000 in Prince Edward Island
The winds caused severe damage including a crane collapse in downtown Halifax, uprooted trees, roof collapses, debris damage, flight delays and cancellations, closed bridges, cancelled services including Halifax Transit and downed power lines. Many business owners are now looking at their insurance coverage to understand how to recover losses for the temporary interruptions that affected their business’ ability to operate and what next steps to take.
A relevant coverage included in many insurance policies is off-premises utility interruption, which provides coverage for losses related to an interruption in utility service. For the loss or damage to be covered, the interruption must result from direct physical loss or damage by an insured peril. In addition, there is typically a waiting period of 24 to 72 hours before the coverage commences.
Given the complexity of insurance policy wording and coverages available, it may be difficult for a business owner to know the extent of the business losses covered, and whether it makes sense to submit an insurance claim. In some cases, short-duration losses can be significant, making the filing of an insurance claim a worthwhile endeavour.
Some of the more significant considerations to be aware of in reviewing an insurance policy for business interruption loss coverage include the following:
- Measure of recovery – what policy form do you have? Profits, earnings or business income?
- Ordinary payroll – do you have coverage for non-essential employees? How long is the coverage duration?
- Increases in the cost of working – have you incurred additional operating costs to mitigate your losses?
- Extra expenses – do you have separate coverage for extra expenses?
The company’s insurance broker or insurer can assist in understanding what coverages are available. To assist in preparing a claim, the policy may provide coverage for professional fees, which reimburses a policyholder for the cost of retaining an independent forensic accountant specializing in the preparation of business interruption insurance claims.
If a policyholder is making a claim, some tips to improve claim accuracy and insurance recovery include:
- Document how the incident has affected your business, including taking pictures and preparing notes of the operational and financial impacts and additional costs incurred to mitigate the loss
- Contact your insurer or broker and understand your coverages for property loss, business interruption, extra expenses, etc.
- Seek assistance from professionals familiar with commercial insurance matters including lawyers, forensic accountants, adjusters and appraisers
- Be proactive and establish regular meetings and set reasonable timelines with your insurer and adjuster to resolve the claim
- Mitigate losses to the extent possible
- Review and comply with all insurance policy wordings
- Request an advance or partial payments once sufficient proof of loss have been provided
Insurance is a requirement for most commercial businesses. This mitigates against insured perils and compensates a businesses to the extent covered under their insurance policies. Although recovering losses from Dorian or other natural disasters often takes time, resolving the claim in a reasonable and expeditious manner is the ultimate goal.