Insurance Coverages and Practices That Can Help Community Banks Recover After a Tornado

When a tornado strikes a community, businesses and homes may turn to their lenders in order to rebuild. However, a local bank may not have the same resources as large financial institutions—and the bank may be struggling with its own damage and losses. Attorney Bill Voss offers a few vital insurance options for bank owners, as well as ways owners can be resourceful in order to recover after a tornado.

Common Methods Bank Owners Use to Recover From a Tornado

A natural disaster such as a tornado can cause destruction throughout the area, leading many property owners to withdraw funds, request loan deferments, or request new loans. While increased lending will lead to profit through interest payments, it can take years for the interest to accrue—and this may not be enough to offset the bank’s immediate costs after the disaster.

That said, small banks have options when it comes to tornado recovery, including:

• Filing a property damage claim. Owners should invest in a comprehensive commercial physical damage policy that includes all valuable items, deposits, inventory, and equipment. Policies should cover the structure itself if the bank is in the owner’s building, or everything housed at the location if the business owner’s primary location is in a rented space.
• Collecting business interruption payments. Business income loss it vital for any commercial endeavor. This coverage provides up to six months’ worth of lost income while the business is in a recovery period, giving the owners time to rebuild.
• Opening a temporary location. If the original location cannot safely reopen immediately, owners can create a temporary site to keep their services open to the public. Business income insurance endorsements may cover the costs of moving operations to a secure secondary location.
• Changing lending practices. Small banks rely more heavily on their deposits than their larger counterparts, so owners may be forced to change their business practices in the months following a disaster. Common methods include reducing mortgage lending in areas that were not affected by the disaster or increasing interest rates payable on short-term deposits.

If you need help with your tornado damage insurance claim, we can work to get you full and fair payment to make repairs and reopen your doors. Please contact the Voss Law Firm at 1-888-991-3212 or simply fill out the form on this page today to get answers to your questions.