Hurricanes and Windstorm Coverage

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...“normal business operations.” This endorsement can be 30 days, 60 days, 90 days, and so on, and provides a cushion as you return to your pre-loss sales volume. Understanding your potential losses and having an idea about how long it will take to regain a steady flow of business after rebuilding is key to properly insuring against your potential business interruption exposure.

Note: Business interruption calculations are never cut- and-dried. Determining your business interruption claim will vary greatly depending on the forecasts that you use.

Make sure an accountant or public adjuster with experience in the valuation of business interruption claims assists you in the claim process.

Extra Expense

What does it cover? How can it help me?

Extra expense insurance covers expenditures over and above your normal expenses following a covered insurance loss, to continue the operation of the business. The intent of extra expense coverage is to have monies available to pay for reasonable expenses required to mitigate any further exposure to a business interruption claim. When it comes to windstorm, businesses sometimes need to cover extraordinary costs associated with massive cleanup, e.g., rental equipment; relocating to a temporary location while they rebuild the space; distributing goods from a different warehouse with an associated increase in shipping costs; or paying overtime for employees. These extra costs...

Case Study:

A retail store suffered major damage that would take eight months to restore. In order to mitigate their business interruption losses, the retail store opened a temporary location within a mile of the original location, with similar square footage and a six-month lease. The insured had extra expense costs to move equipment to the temporary location, rental of computers and furniture, installation of telephones and internet, and the cost of hiring hourly employees to prepare the temporary location for opening.

In addition, the extra expense coverage absorbed the cost differential between the normal rent at the original location and the increased rent at the temporary location with the six-month lease. The extra expense coverage also covered the costs of moving back into the original location after reconstruction.

The intent of extra expense coverage is to have monies available to pay for reasonable expenses required to mitigate any further exposure to a business interruption claim. When it comes to windstorm, businesses sometimes need to cover extraordinary costs associated with massive cleanup.

Case Study:

A medical group had 37 offices throughout Florida. A hurricane was approaching the coast, and there were mandatory evacuations in various parts of the state. After a mandatory evacuation, the anticipated hurricane slowed down and did not hit until 18 hours after the anticipated landfall. After the hurricane hit, three coastal towns were inaccessible for several days, and residents were unable to return. Several doctors appointments were cancelled and postponed. As a result of the evacuations, the medical group made a claim for business interruption losses for 16 locations. Of the 16 locations that suffered business interruption losses due to the windstorm, only five locations actually triggered coverage because of the language in their policy. For these, the lost profits (in excess of the deductible) from the cancelled and postponed appointments were paid by the insurance carrier.


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