Business Interruption Insurance: Are we covered?
One of the most common questions asked after a hurricane is “are we covered for loss of income?” As with all insurance policies, there are specific terms and conditions that must be met to determine if coverage applies. With business interruption insurance, coverage is triggered by direct physical damage to property at a covered location caused by a covered peril. This is typically subject to a waiting period (i.e. 72 hours) as a deductible. Also, as with all insurance policies, there are exclusions.
Damage caused by a power outage after a hurricane is typically widespread and can take months to restore. Many businesses are forced to close until the power outages or other utility services are restored. "In general, standard commercial property insurance does not cover loss due to failure of power or other utility service to the described premises if the failure occurs away from the premises," said Loretta Worters, a spokeswoman for the Insurance Information Institute.
Some carriers may offer optional add-on coverage for loss of income due to off-premises interruption in utility services. In Florida, this special coverage can be costly and difficult to obtain.
In this ever-changing world, businesses now face more natural and man-made disasters than before, complicating the management of their risk and insurance programs. Hurricanes, tornadoes, fires, unauthorized access/intruders in our physical space and electronic data systems, terrorism, government shutdown are all business risks that may cause a business interruption. This requires strategic planning through a business continuity plan—one that will respond effectively to disaster planning.
Each situation is unique, and the insurance company claim adjuster will make the final coverage determination. However, you may have questions, so please give your Lykes advisor a call if you would like to discuss your situation in greater detail.
Office of Insurance Regulation Emergency Order
Governor Scott has directed an emergency order for Florida residents and businesses. Between September 4, 2017, and October 15, 2017, no insurer shall cancel or non-renew a policy or issue a notice of cancellation or non-renewal covering a person, property, or risk in Florida, except with the written request or concurrence of the policyholder. The October 15, 2017, date may be extended at the discretion of the Commissioner. * This extension does not represent a period of free coverage for insureds. Insureds will be required to pay the full amount due on their policies. Please contact your insurance advisor for more details.
IRS Tax Relief Update
The IRS has given Tax Relief to victims of Hurricane Irma for certain tax payments and filings. This includes the September and January estimated tax payment to the IRS for 2017 income taxes. January 31st, 2018 is the new due date for these payments. However, payments may still be made by the original date if so desired.
The relief applies to those who live in, or have a business in the affected area of Hurricane Irma, defined as those with a FEMA disaster designation. As of the writing of this email, the extension has been applied to all Florida counties. If you live outside the areas recognized, but your records are held in an affected area you may be eligible for this relief after correspondence with the IRS.
For more detailed information, go to: https://www.irs.gov/newsroom/tax-relief-for-victims-of-hurricane-irma-in-florida
The Florida Small Business Emergency Bridge Loan Program
This program has been activated by the Governor of Florida as a result of Hurricane Irma and provides a source of expedient cash flow to Florida small businesses that have been physically and/or economically impacted by the storm. These short-term, interest-free working capital loans are intended to “bridge the gap” between the time a major catastrophe hits and when a business has secured longer term recovery resources, such as sufficient profits from a revived business, receipt of payments on insurance claims or federal disaster assistance. More details may be found at http://www.floridadisasterloan.org/ and https://www.fema.gov/disaster/4337.