Typical hurricane preparation advice helps you through a storm, but overlooks the headaches in the aftermath. As insurance coverage attorneys in Florida, we have represented numerous businesses and individuals in disputes with their insurance companies over claims that were improperly denied or underpaid. While such disputes are often unavoidable, there are steps a policyholder can take in preparation for hurricane season to minimize unjustified claim denials and maximize recovery under their insurance policies. The advice below can help hoteliers prepare for the upcoming hurricane season and position properties to recover losses sustained should disaster strike.
Consider first the magnitude of the losses your hotel could suffer from a hurricane. Several years ago, Ver Ploeg & Lumpkin represented a hotel that was first struck by Hurricane Katrina in August 2005, and then by Hurricane Wilma in October 2005, forcing the hotel to close. The hotel did not fully reopen until December 2007. The hotel’s insurer refused to pay the majority of its damages. After years of litigation, a jury awarded the client over $28 million in damages, which included over $14 million in business interruption losses, over $12 million in losses incurred in upgrading its windows to comply with current building and energy codes, and over $650,000 for business personal property loss, such as replacing undamaged parts of matching furniture sets under the policy’s “pair and set” coverage.
Losses of this magnitude are not uncommon. Recovering such losses after a claim denial or underpayment, however, can be challenging. Below are steps to help prepare for the challenges that may arise in the wake of a hurricane.
Gather the Necessary Documentation
Keep copies of all insurance policies and other important papers in a safe, dry (waterproof) place. We recommend maintaining electronic copies of same and other business-critical data in a secure cloud storage site or backed up on hard drives in a different regional location. Take photographs of the insured property, including any rare or valuable items. If the photographs are stored electronically, make sure they are stored in a medium that will not be damaged by a storm. If the photographs are printed, store them in a water-tight container. Also, keep a camera available to take pictures following a storm. Save receipts, invoices, work orders, and any other documentation that may help identify or demonstrate the value or condition of insured property.
Retain Professionals Now
Hire a public adjustor or other insurance professional to perform a baseline assessment of the quality of insured elements of the property. Extensive photographs should be taken, particularly of known loss targets: roof, HVAC, stucco and paint, balconies, and sliders, and windows. This assessment should be performed, at minimum, every three years. Inquire with local professionals as to whether you can retain their services now, before a storm hits and while demand is lower. Professionals to consider are water-damage mitigation companies, roofers, and window and glass companies.
Contact an Agent/Broker to Review Insurance Coverage
Review all potentially applicable insurance policies with an insurance professional to verify coverages and the nature of those coverages, including whether the coverage limits are adequate. Check which property elements are insured on a “replacement cost” basis, and make sure the policy allows for payment on an “actual cash value” basis. Also, check the availability of extensions of coverage, such as coverage for compliance with building codes and ordinances, business interruption, fungi/mold damage, debris removal, fences, screens, pool elements, and cabanas. Confirm whether your deductible is per occurrence/event, per season, per building, or aggregate.
Secure Credit While You Can
Commercial property insurance policies often have high hurricane deductibles based on a percentage of the policy limit. Your policy may require you to pay for repairs prior to your insurance carrier issuing payment. Having available cash reserves or credit will also help you to satisfy emergency expenses as they occur. After a major storm event, demand for credit will increase, which may result in increased interest rates. Securing credit now can ensure a more favorable interest rate, while delaying may inhibit your ability to commence repairs.
In the event of a loss, provide your insurance carrier prompt notice both directly and through your agent or broker. Document all repairs completely, and organize them by trade. Do not be afraid to consult or retain a professional—a public adjustor, coverage counsel, or both. Should a dispute arise, gather your documents and prepare to be investigated. Respond promptly and completely. If you follow the advice provided in this article, you will be in a stronger position to recover and to reach an expedient resolution of your claim.
About the Authors
Arya Attari Li, Esq. and Chad A. Pasternack, Esq. are attorneys with the Miami office of Ver Ploeg & Lumpkin, P.A. specializing in helping policyholders with insurance coverage and bad faith disputes.