A hurricane causes devastation for everyone in its wake, including businesses that will help people rebuild when the storm passes. While banks may bounce back after a hurricane more quickly than other commercial ventures, they will typically see low earnings for up to a year due to lost income and damage costs. Attorney Bill Voss explores the unique concerns of community banks when it comes to hurricane recovery, commercial insurance coverage, and steps to take to minimize losses.
Minimizing Hurricane Losses to a Bank After the Storm Is Over
Unlike other storms, hurricanes can have long-lasting effects that can delay an owner’s ability to calculate losses and file a timely claim. Road closures, extreme flooding, and loss of public utilities can make it difficult for owners to take control after a hurricane, especially if their staff members are struggling to recover from damage to their homes.
Once it is safe to return to the property, owners should:
- Assess the damage. Take pictures or record a video walkthrough of every part of each facility, including branches, satellite locations, and ATMs. If the location must be closed, make sure calls are forwarded to another branch and post a notice informing customers how to access their banking services.
- Make temporary repairs. Insurers may not pay for any damages that occur after the storm, especially if owners do not attempt to protect the property from further losses. Owners are responsible for pumping out standing water, installing flood barriers, boarding up windows, and securing the area with fencing to ensure nobody is injured on the property. They should also transfer cash, valuables, and other deposits to secure locations that have not been compromised in the storm.
- File an insurance claim. You are likely to experience processing delays due to the high number of claims that are filed after a disaster. You should notify your insurer of the damages you have suffered as soon as possible, since it may take some time to schedule an inspection to estimate the cost of damages.
Special Considerations for Insuring a Community Bank Against Weather Damage
Whether your bank has one branch or hundreds, you will have to examine your insurance policy carefully to claim the full amount of your losses. The selections you make on your commercial coverage can literally cost you millions, especially if you do not have enough insurance for:
- Data loss. Banks should have a comprehensive electronic data loss policy to protect customer account information, surveillance and theft protection systems, data servers, network security, financial records, and other electronic information.
- Utility interruption. Businesses cannot operate effectively without electricity, internet connection, or telephone lines, and employees cannot return to work if water and sewer service has not been restored.
- Lost business income. There are many ways financial institutions can suffer income loss due to disaster relief. Banks may lose income by waiving late fees or ATM fees for their customers in the days after the storm, while customers may withdraw emergency funds from savings accounts or default on new loans. Business interruption insurance pays for the lost revenue your bank suffers for a specified period of time after the event.
- Payroll coverage. Payroll replacement provides funds to staff members who are laid off during the repairs, as well as the costs of hiring and training new staff members after the restoration is complete.
- Extra expense coverage. Even if a bank has a strong insurance policy, it can still be worth it to purchase extra expense coverage as an add-on to an existing contract. This insurance provides a set amount to cover operational costs during the period of repair, and can include the costs of moving to a temporary location, paying staff members for mileage and overtime, and other unforeseen expenses.
If your insurer is refusing to provide the coverage you paid for after a hurricane, we can examine your policy carefully and fight to get you the funds you need to recover. 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.