Texas experiences an average of a hundred tornadoes every year, more than any other state in the U.S. Each time warm weather draws in, it brings the threat of a storm that can level buildings and destroy livelihoods—making it vital for business owners to have coverage that will protect them. Attorney Bill Voss explores commercial insurance options that can help owners recover after a tornado, allowing them to fill any coverage gaps before disaster strikes.
What Business Owners Need to Know About Commercial Tornado Insurance
One of the biggest concerns business owners face when it comes to tornado damage is the possibility of a denial due to causation disputes. Most property damage policies include tornadoes as a covered weather peril, but exclude damage caused by wind-driven rain, construction defects, wear and tear, or mold and wood rot. After a storm, it may be difficult to tell whether the damage was a result of the tornado, improper maintenance, or another excluded peril. It may take extra time and effort to collect payment for damage with multiple potential causes, while policies with “anti-concurrent causation” clauses will likely be denied altogether.
In addition to checking your policy’s concurrent causation coverage, you should know whether your policy includes:
- Total loss property damage. An insurer may be willing to cover roof damage or broken windows, but what if the whole structure is destroyed? Businesses will need to ensure that they are covered for a total loss—including reimbursement for damage to any equipment, inventory, and other assets on the property.
- Code upgrade coverage. If a portion of a structure has been damaged, owners will have to adhere to current building codes when they restore the property. Upgrade coverage can offset the cost of installing new utilities and meeting new building regulations, and may cover the increased cost of construction or demolition.
- Commercial auto damage. Commercial owners may protect their business vehicles from tornado damage by purchasing comprehensive commercial auto insurance, or by adding an enhancement to their property insurance specifically naming tornadoes as a covered peril.
- Contingent business interruption. Even if your business is out of a tornado’s path, your suppliers may not be so fortunate. If your contractors or suppliers are unable to fulfill their contracts due to tornado damage, your contingent business interruption insurance covers any loss of revenue you incur while locating an alternate supplier.
- Business interruption. A tornado causes two kinds of destruction: the damage done during the storm, and the months of uncertainty and income loss for property owners afterward. Owners could lose thousands in business income while repairing or replacing damaged property, especially if they have to cease operations during construction. Business interruption coverage can replace lost business income for six months or a year after a covered loss, allowing owners to focus on restoring the property.
- Extra expense. In some cases, an adverse event will cause damage that is costly but not severe enough to close the business’s doors. Extra expense coverage is a useful option in these cases, as it provides an additional amount for the increased cost of normal daily operations after a loss.
- Seasonal business disruption. Companies may rely heavily on revenue from a certain part of the year to make annual profit goals, and a tornado can mean the loss of an entire season’s income. Whether a business operates for a few months or year-round, seasonal business insurance can cover the loss of income until normal operations resume, preventing long-term damage from a single event.
If you are having trouble getting your insurance company to cover all of your tornado losses, we can help. Our attorneys can examine the details of your policy, explain your options, and negotiate with the insurer on your behalf to get you the maximum amount of coverage allowed under your policy. Simply fill out the form on this page today to contact the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.