Commercial business loans cover flooding as a natural disaster that could affect a business. An example of what happens to a business that gets damaged in a flood is that a commercial property insurance policy gets started providing additional coverage that insures the cost to repair or replace what has been physically damaged, requiring compensation for the policyholder to cover lost profits during the period of time needed to recover from the physical damage.
If a factory burns down, the property insurance policy is designed to pay out the amount that is needed to replace the damaged property.
The policy is dependent on how long the repair work will take. As an example, a damaged property with $3,000,000 in lost sales will be covered by the “business interruption” criteria of losses.
Businesses need coverage Having a Business Income Limit of Insurance will be shown in the Declarations a business makes after a huge loss such as flooding. Some businesses that do not have flood insurance in the Northeast are not doing themselves a favor since there were mandatory evacuation orders in New York, New Jersey, Delaware, and Connecticut during Hurricane Sandy.
Without property damage insurance in a situation like this, a business cannot recover from its losses easily. Not every loss for a commercially zoned business has to be about physical damage, although flooding is a likely reason to get [property damage insurance. In order to get compensated for the physical, real-world, property losses a business has to have proof of loss.
There has to be reasonable access to the property because businesses that have had their business income claims denied due to flooding should have their policy looked at again.
Business income loss has to be given to the individuals looking for it to compensate for the lost income that happens during the repair of the property, and this is known as a business interruption that causes profit loss.
The term, “extended business interruption” is what provides coverage, limited to a period of time, because of the income lost after the property is repaired, before income goes to its pre-loss level.
Then we have the term “contingent business interruption” that provides coverage for the insured’s loss of income that results from physical damage, and not to its property, and also to the property of providers, or suppliers on one side, and consumers of its product or service on the other side.
Damaged caused by Hurricane Andrew as of August 23, 1992, led to a decision in the Dictiomatic case vs. USF&G 958 F Supp 594, SD Fla 1997 where Dictiomatic maintained an office, that was denied access to from August 24 to September 2nd, to a floor with their computer, phones and fax machines.
Business interruption insurance serves to cover interruptions like these that are caused by natural disasters. Loss of profits has to be done with analysis styles that are similar to business operations and comparable markets.
Recovering lost profits means that there has to be an ongoing business with a set sales record. The business has to prove they can make a decent profit from commercial recovery services.
USF&G had a situation where Dictiomatic was ruled by the court as not having established the amount of their business loss claim with credible testimony that was also reliable enough to prove their claim had merit.
The court awarded USF&Gs attorney fees against the insured and its attorneys jointly. It is best to seek the advice of an attorney with experience in business interruption loss that will be well known to the insurer, the accountants and attorneys. A business can recover using commercial recovery services.
Hurricanes do major businesses serious harm in hurricane-prone regions. This is why it is necessary to have hurricane insurance. Property damage is hard to fix and can take at least a year to replace. Insurance has to compensate for profits lost during the temporary hiatus the business that has been damaged goes on.
The American Bar Association will pay actual losses of business income only because the business has to continue if no losses have occurred. The flooding in the Northeast during Hurricane Sandy did cause a lot of damage that insurers managed to cover.
Sometimes property does need to be replaced in the event of natural disasters. The damaged property takes a year to repair sometimes, so insurance coverage has to be used. Interruption coverage is only triggered by a physical loss such as a fire, which is why insurance coverage is necessary and required.
A business will eventually go back to the same levels of income prior to the loss since the company asking for such damages must prove this in court as Hurricane Sandy caused wind damage and power outages that prevented employees from coming in to work during that time.