Varying levels of coverage exist for natural disasters
— With earthquakes in NEW YORK
California and Hurricane Barry striking states along the Gulf of Mexico and in the Midwest, small business owners should look at their insurance policies and determine how well covered they’d be in the event of a natural disaster.
Damage from tornadoes and hurricanes are covered by standard business insurance policies. But some insurers won’t sell policies in coastal areas that are at a high risk for a hurricane. And coverage for flooding, earthquakes and volcanic eruptions is likely to need separate, and often expensive, policies.
Standard business policies are for real property, and don’t cover cars or other vehicles. Owners need to buy business auto insurance, and be sure it will reimburse them for damage from disasters in addition to the standard collision and liability coverage.
The basics of business coverage for natural disasters:
Hurricanes
A standard business policy will cover losses from wind damage like broken windows and roofs that are torn away. And if rain gets inside the building, the damage from the water is also covered. But if the water is due to a flood, entering a building from ground level, that damage isn’t covered. A company will need separate flood insurance, which is regulated by the federal government. It can be expensive for companies that are located in or near flood zones, but businesses can lower their premium costs if they take steps to make their property less vulnerable to flood water.
Tornadoes
Standard business insurance policies cover wind damage and therefore will reimburse for losses from tornadoes. These policies also cover rain and hail, and damage from both.
Earthquakes
Earthquake policies cover a variety of damage from tremors, and each insurer decides what kind of damage they’re willing to cover. Some charge high deductibles, as much as 20%. Earthquake coverage is sold separately from a standard business policy.
Volcanoes
There are 169 volcanoes in the United States, although major eruptions like last year’s Mount Kilauea lava flow are rare. Most business insurance policies provide coverage for damage caused by a volcanic explosion, shockwaves, ash, dust or lava, according to the Insurance Information Institute. But like flood zones, most insurers won’t sell volcano coverage inside what are known as lava flow hazard zones. The state government in Hawaii, however, has created the Hawaii Property Insurance Association, a group of insurance companies that will cover volcano damage.
Volcano insurance won’t cover land, trees and property that’s left out in the open. And if an eruption sets off earthquakes or mudslides, that also won’t be covered; owners can, however, purchase separate earthquake insurance.
You can get information about the types of business insurance and the disasters that are covered at the website for the Insurance Information Institute, a trade group. Visit www.iii.org.