Whether you are a local manufacturer working on a small-batch shop basis or own several production lines across the country, it is vital that you have adverse weather coverage to protect your business. Attorney Bill Voss explores the unique insurance risks for these businesses and how to choose the special coverage options for the type and scale of your facility.
Essential Wind Coverage for Owners of Industrial and Manufacturing Facilities
When it comes to selecting coverage against windstorm damage, owners should consider the following insurance options:
- Property damage. A good property damage policy will cover the full range of your property after a windstorm, including warehouses and office space, office equipment, outbuildings, and inventory.
- Extra equipment. Basic property damage coverage may limit the amount of the claim to a figure that does not cover your expensive industrial equipment. Consider adding extensions that specifically cover the most costly items (such as fermentation tanks for beer or wine, conveyors and production line equipment, and heavy machinery) or those that are at most risk in a wind storm.
- Power outage. An extended power outage after a wind storm can cause lower production output, spoilage of food and beverages, and other income and inventory losses. Power loss protection can be customized to the particular needs of your business, such as replacing refrigerated inventory, renting temporary lighting and heating services, and replacing business income from the outage.
- Commercial auto. Your business may rely on a variety of different vehicles, including delivery trucks, vans, and passenger cars. A strong business auto insurance policy will provide not only liability coverage, but comprehensive coverage for damage caused by a non-collision event.
- Specialized inventory endorsements. There may be a policy tailored specifically to your type of industry, such as textile manufacturers’ insurance to cover clothing and furnishing losses or metal and plastic manufacturers’ insurance to protect products and inventory lost on site.
- Inland marine coverage. Manufacturers can lose thousands of dollars of inventory if a truck or offsite storage facility is compromised in a storm. Inland marine insurance pays to replace any products or materials that are damaged in transit.
- Equipment breakdown coverage. Also called boiler and machinery coverage, this insurance covers breakdowns due to a variety of causes, including power surges. It can pay for repairs or replacement of damaged machinery, as well as the lost income and business interruption the loss of the equipment has caused.
- Data loss coverage. If a power outage or power surge resulted in the loss of financial records, customer information, or other important electronic data, this coverage can help pay for the costs of IT services to restore company records.
- Business interruption and extra expense. Manufacturers may be unable to meet quotas due to an adverse event, depriving them of their profits and business agreements with retailers. Business income insurance provides payment to cover expenses while production is stopped or slowed due to repairs. Extra expense coverage can pay for the costs of overhead, including employee salaries, rent, or even relocation expenses.
- Seasonal insurance. Manufacturers who rely more heavily on profits from a specific time of the year may benefit from seasonal loss insurance, which can make up the difference in profits for the quarter and avoid end-of-year losses.
- Anti-concurrent causation. Wind storms may come hand-in-hand with other perils, such as rain, hail, and power outages. Unfortunately, insurers may refuse to cover damages under the doctrine of concurrent causation—damage resulting of a mix of covered and non-covered events. Owners should read their policies carefully to ensure that all losses will be covered when perils combine.
If you are struggling to recover after a severe wind storm, our attorneys can work to get full and fair payment from your commercial insurance carrier. 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.