Business owners often take precautions against the wind and rain brought in by an oncoming storm. However, lightning poses a particular risk to small and large businesses—and since it travels over 100,000 miles per hour, your business can be damaged in the blink of an eye. Attorney Bill Voss explains the largest losses associated with lightning strikes, how to reduce lightning damage risks, and how to file a commercial property damage claim that will cover the maximum amount of your losses.
The 3 Costliest Forms of Lightning Damage to Commercial Business
Over 20 million cloud-to-ground lightning strikes occur every year in the United States, each one carrying enough energy and heat to turn sand into glass. A bolt of lightning can strike homes, trees, factories, and utility systems, and these combined events cost around $1 billion in annual property damage losses.
The majority of lightning strike insurance claims involve damage due to:
- Fires. A lightning strike can spark a fire upon contact with almost anything it touches, causing significant damage in a matter of minutes. While commercial fire insurance may cover fires started by lightning, coverage for smoke damage to walls and flooring or water damage from firefighting efforts often vary from policy to policy.
- Electrical damage. Lightning can wreak havoc on appliances, computers, stereo equipment, phone systems, and other electronics, permanently damaging the electrical fixtures and infrastructure of your business. The power surge from a lightning strike can send an unbridled electric current through electronic devices, weakening or completely frying the circuit board. Property owners may not know the full extent of lightning damage simply because some systems may work intermittently, eventually failing weeks after the initial strike. Electrical damage to devices can also void the warranty, resulting in higher repair costs in the future.
- Indirect effects. A bolt of lightning can cause significant damage even when it does not make direct contact with a commercial property. Lightning may strike a tree next to the property, causing it to drop heavy limbs onto roofs or through windows. A strike to an electric fence surrounding the property can travel throughout the electrical grid, causing the loss of livestock and forcing the replacement of miles of fencing. Even when a lightning strike occurs miles away from your property, it can bring down electrical lines or affect wireless communication, interrupting your business operations.
Some Businesses Have a Higher Risk of Lightning Strike Losses Than Others
Location can play a role in lightning strike risk, as a business in states with wide-open spaces or unpredictable weather patterns is naturally more at risk than others. On one side of the country, Florida experiences more than 26 lightning strikes per square mile every year. On the other, lightning strikes have been known to spark wildfires, clearing acres of brush and trees in the Southwest.
Some additional factors that can affect both the odds of a lightning strike and the amount you receive for your claim include:
- Size. The taller a structure is, the more likely it is to suffer weather-related damage, including lightning strikes. If you are constructing your headquarters from the ground up, your building design should include lightning terminals, conductor cables, and ground rods to withstand and divert energy away from the structure. While owners may not be able to change the height of a building, they can install lightning protection systems to guard against fires and structural damage.
- Age. The age of your business location can make a big difference in the amount of money it will take to repair it. A structure built mostly out of wood (as many historical properties are) is more likely to burn down to the foundation than structures built from more modern materials. Older structures are also likely to require more building code upgrades during restoration.
- Industry. The type of business you are in could make you more at risk of electrical or fire damage caused by lightning strikes. If your enterprise relies on a wide network of interconnected electronics, damage to these items can be extremely expensive whether they are repairable or a total loss. On the other hand, large-scale farming operations may not have adequate fire insurance to cover crop losses, turning a bad season into potential bankruptcy.
- Infrastructure. Network connectivity between terminals or employee workstations are necessary to remain relevant and efficient in the modern world, but these systems can also increase the extent of electrical damage. Lightning losses can increase dramatically based on the number of electronic devices affected by a power surge, leading to partial inability to serve customers or total closure of operations, giving rise to a business interruption claim. Insurers may also refuse to cover the damage if there were not adequate surge protectors in place or if the electrical wiring and fuses were not up to code before the strike.
- Policy exclusions. It pays to reread your commercial insurance policy annually to be certain of what will and will not be covered in the event of a loss. For example, a clause denying payment for concurrent causation or deductions for the amount of depreciation on your property can leave you paying thousands of dollars out of pocket at a time when you most need extra capital.
- Policy extensions. You can increase the amount of protection your policy offers by carefully selecting a few optional extras. For example, insurers will typically not cover damage from an electrical surge that occurred off the premises. However, utility interruption insurance can provide payment for some of these losses, especially when combined with data loss insurance.
Let Us Advise You on Your Lightning Damage Claim
Unfair denials, delays, and underpayments are common problems for commercial policyholders, many of whom do not know that they can fight back against insurance companies acting in bad faith. If you have taken all the necessary steps to file a commercial insurance claim and you still aren’t being treated fairly by an insurer, we can help.
Our insurance litigation attorneys will work to maximize your insurance claim, and we do not collect our fees until your case is resolved. Simply fill out the form on this page today to contact an insurance attorney at the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.