Commercial catastrophe preparations. Many companies make the mistake of only accounting for the obvious threats to their businesses. (Photo: Shutterstock)

From polar vortexes to tornadoes to wildfires and hurricanes, the United States has recently seen its fair share of natural disasters. In fact, according to Chubb, the average claim cost for a flood — the most common and costly natural disaster in the United States — increased by over 550% in the last five years, jumping from $50,000 to $290,000 per claim.

Regardless of the type, the impact of an extreme weather event can be devastating to a business, both in terms of physical property damage and lost productivity. The combined result? Extended periods of lost income that can lead to long-term business damage.

With extreme weather predicted to only get stronger and more frequent, it is a question of when, not if, a storm will roll into town. Fortunately, there are several strategies agents and brokers can employ to help business owners minimize and reduce associated claims.

Help clients think beyond what’s top of mind

To beat any storm, you need to get ahead of it. That starts with recognizing what types of events could affect your clients’ businesses.

Unfortunately, many companies make the mistake of only accounting for the obvious threats to their businesses. If a business is on the coast or close to a body of water, it might seem obvious to invest in flood protection. But with more dramatic weather patterns, issues like inland flooding should raise concerns for businesses, even if they aren’t located close to a body of water. For example, during hurricanes Harvey and Florence, news outlets reported that the majority of the damage came from inland flooding, not coastal wind damage.

Natural disasters caused by human error also need to be anticipated. While this may seem unlikely, research shows it is more common than most think. For example, 8 out of 10 wildfires are caused by humans. They can happen anywhere and are just as devastating to businesses as if they occurred “naturally.” Such threats should be factored into all preparation plans and procedures.

Advise on a business continuity plan

To prepare for a disaster, it’s imperative that clients identify their company’s critical business risks and functions. In the event of a storm, this insight will enable business owners to enact procedures that facilitate the restoration of sales, production and operations to pre-disaster levels.

It starts by developing a business impact analysis (BIA) that ranks functions from highly critical to important, enabling businesses to recover their most critical functions first. As part of the planning, businesses should assign a designated person to oversee the process and assemble a core team of individuals that represents each business department. They should also ask their IT vendor if they offer a service where replacement equipment can be quickly shipped after a disaster, as well as ensuring that backup data files are stored offsite for quick accessibility.

In addition, proper preparation can help reduce damage and potential loss of life dramatically, and there are several action steps that businesses can take when a storm is approaching, including:

  • Fill emergency generators and fire pump fuel tanks.
  • Inspect storm, roof and floor drains to ensure they remain free of debris and are fully operational.
  • Cover all windows and doors with shutters and plywood.
  • Anchor or remove all outdoor equipment, including items on the roof.

The above is by no means a complete list, so companies will need to further assess their exposures and identify steps to eliminate or minimize the impact. In addition, when all’s said and done, businesses need to document the plan and procedures step-by-step. These procedures will allow businesses to respond to the disaster at hand in a timely manner — whether they have advanced notice or not.

That said, in an emergency setting, procedures are only effective if they are practiced and up-to-date. While it may seem time-consuming and costly, it can massively decrease the impact of an event if a business continuity plan is tested and updated, particularly if there have been changes to the business operations.

Ensure sufficient coverage is in place

While most clients will have a standard property policy in place, an out-of-the-box policy may come at significant cost to clients. Put simply, limited insurance protection might mean lasting financial damage.

Helping your clients find the right insurance to respond in the event of a disaster is critical. Remind them that when evaluating their policies, it’s important that they have insurance for:

  • The replacement cost of their business’ damaged property.
  • Fees associated with restoration, including costs related to debris removal and ensuring the building is rebuilt up to code.
  • The loss of income during the restoration period, as restoration can take varying lengths of time depending on the severity of the storm and the extent of the damage.
  • Extra expenses associated with continuing operations, for example, renting an alternative facility or buying temporary equipment.

You will also want to make sure that they have a firm grasp on the limits associated with their policies. Limits that are too low can mean uninsured expenses, which can inhibit the necessary steps for executing a business continuity plan.

Arm your clients with the tools they need

Anticipating needs and enacting the aforementioned processes can be overwhelming — and some businesses might not even know where to start.

Pointing clients to resources, like Chubb’s “My Business Income,” which provides a consistent methodology for computing anticipated business income and extra expense limits, can help your clients understand the bigger picture as they work to minimize the impact of extreme weather on company productivity. Having this insight early on will help your clients get started on these efforts as soon as possible.

With hurricane season approaching in June, wildfires raging year-round, and other extreme weather events unfolding regularly, there is no time like the present. Make a plan to talk with your clients today.

Michelle McLaughlin is executive vice president, property and marine manager of Chubb Commercial Insurance. Contact her at


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