Business Interruption Claims for a Power Outage Caused by a Hurricane

Hurricane Beryl has set early season intensity records, including being named the strongest July hurricane in history, according to The Weather Channel. Hurricane Beryl was first reported as a Tropical Depression on Friday, June 28 in the Atlantic Basin, but it quickly grew in just 48 hours into a Category 4 storm, and later, a Category 5 storm. Beryl carved a devastating path through several islands and countries, leaving destroyed homes, downed trees, power outages and floods in its wake.  
 
At the beginning of this week, Hurricane Beryl slammed into Texas as a Category 1 hurricane and traveled through the United States, causing flash flooding and over four dozen tornadoes from the Texas coast all the way to upstate New York. The Associated Press reported that Beryl has left nearly 3 million homes and businesses without power, who are also faced with extensive property damages resulting from powerful wind gusts and flooding.

Handling a business interruption claim for a power outage caused by a hurricane can be complex, but careful preparation and documentation can help ensure a smoother process. Here are some key points to consider:

1. Review Your Policy:
   • Understand Coverage: Familiarize yourself with the specifics of your business interruption insurance policy. Ensure you understand what is covered, including any exclusions or limitations related to power outages and hurricanes.
   • Waiting Period: Check if there is a waiting period before coverage begins. Some policies may have a deductible period or require the outage to last a certain amount of time.
2. Document the Loss:
   • Record Details: Document the date and time the power outage started and ended. Keep detailed records of how the outage affected your business operations.
   • Photographic Evidence: Take photos or videos of any physical damage to your property caused by the hurricane.
   • Financial Records: Maintain comprehensive financial records, including profit and loss statements, payroll records, and invoices. This will help in demonstrating the financial impact of the interruption.
3. Mitigation Efforts:
   • Minimize Losses: Take reasonable steps to mitigate your losses. This might include using backup generators or relocating operations if possible. Document these efforts as they show your intent to reduce the financial impact.
   • Track Expenses: Keep track of any extra expenses incurred to mitigate the loss, such as renting generators or temporary office space. These costs may be covered under your policy.
4. Communicate with Your Insurer:
   • Prompt Notification: Notify your insurance company about the claim as soon as possible. Delays in reporting can complicate the claim process.
   • Provide Documentation: Submit all relevant documentation to your insurer, including the evidence of loss and mitigation efforts. Be clear and organized in your submissions.
   • Stay in Touch: Maintain regular communication with your insurance adjuster. Keep records of all communications, including emails and phone calls.
5. Consider Professional Assistance:
   • Hire an Accountant: An accountant experienced in business interruption claims can help quantify the financial impact of the interruption and prepare the necessary documentation.
6. Legal Consultation:
   • Seek Legal Advice: If your claim is denied or if you encounter difficulties with your insurer, consult with an attorney who specializes in insurance claims. They can provide guidance and represent your interests in disputes.
7. Prepare for Future Incidents:
   • Emergency Plan: Develop or update an emergency response plan for future incidents. This plan should include steps for safeguarding your business and minimizing losses during similar events.
   • Backup Systems: Invest in backup power systems or other contingencies to reduce future business interruption risks.

By thoroughly understanding your policy, meticulously documenting your losses, and proactively communicating with your insurer, you can improve your chances of a successful business interruption claim.