As we take in the toll of Hurricane Helene, we look ahead to recovering from that storm both in terms of the property damage and business losses that have resulted thus far, and likely will continue for months and even years to come.

In this article we provide practical guidance on what to do in the immediate aftermath of Helene, both for those businesses in the path of the hurricane and those whose businesses indirectly are impacted by the storm.

Rising Severity and Frequency of Storms

The increasing intensity of hurricanes, driven by the rise in ocean temperatures, has heightened the risk for property damage and business interruption across many areas of the United States.  Historic storms like Hurricane Katrina, Superstorm Sandy, and recent storms such as Hurricanes Harvey, Irma, and Maria – and most recently Helene – show that weather events once considered rare are becoming regular occurrences.  These storms cause widespread property damage, disrupt businesses, and often result in challenging insurance claims.

While the impact of these storms is most visible in the areas where the hurricanes cut their path, the financial impact of the storms extends far beyond their geographic footprint.  Consider those companies who rely on suppliers in the areas directly impacted by the storms that suffer financial losses even though their property was not directly damaged in the storm.  Most commercial property policies cover these losses as well.

Understanding Your Insurance Coverage

1 / Look To First-Party Insurance

Most businesses affected by Hurricane Helene will look to first-party insurance policies for recovery.  First-party insurance protects policyholders from losses they suffer to their own property including business interruption losses.  These policies are often called “commercial property” insurance policies, but first-party insurance can come in other forms like “inland marine,” “fire,” “boiler and machinery,” “equipment breakdown,” or “multiperil” insurance policies.  These policies and their sometimes misleading names, conditions and coverage, can create confusion and potentially cause policyholders to ignore areas of coverage that might be applicable and valuable.  Therefore, regardless of name, review all of your insurance policies for potential avenues of coverage.

2 / Property Insurance Policies: Looking Beyond The “Bricks & Sticks”

Most policyholders recognize that property insurance policies pay for physical loss or damage to buildings and business property – machinery, equipment, inventory, raw materials – as well as property of others in the policyholder’s control.  However, property insurance policies typically include additional coverage beyond physical losses.  Although property damage is common following a hurricane, often the most significant losses come in the form of lost revenue and intangible monetary losses.

An additional coverage usually found in property policies is business income coverage.  Business income coverage insures the policyholder’s loss of net revenue during the time needed to recover following the storm.  In addition to business income coverage, a policy may insure extra expenses.  Extra expense coverage generally covers the policyholder’s costs in minimizing or avoiding a business income loss or avoiding further property damage.  Policyholders should determine what coverages are available under their property insurance policies in order to maximize recovery for losses beyond the physical damage to property and equipment.

3 / Beyond the Hurricane’s Geographic Path – Contingent Business Interruption Coverage

While Helene’s impacts are most visible in the areas where the hurricane cut its path of physical destruction, the financial impact of the storm extends far beyond its geographic footprint.  Businesses who rely on suppliers in the areas directly impacted by the storms may suffer financial losses as a result of the damage to their suppliers.

When a business is impacted because one of more of its key suppliers or business partners is impacted by an event like Hurricane Helene, they may be able to recover their losses through contingent business interruption coverage.  Contingent Business Interruption coverage (commonly called “CBI” coverage”) can be encompassed within or in addition to the business interruption coverage part of a property insurance policy.  CBI coverage may provide coverage for loss of net income, continuing expenses and extra expenses resulting from a shutdown of a key supplier or customer.

This is important coverage and all businesses impacted, even though they are not in the path of the storm. Affected businesses should look to this coverage and consult with knowledgeable coverage professionals who are able to assess whether their losses are covered by insurance – and assist in providing notice and submitting a claim.

4 / Civil Authority Coverage

In some cases, losses may result from emergency efforts coordinated and performed by governmental agencies and officials.  If the operation of your business is limited because of government orders that restrict access to your business, your first-party property insurance policy, particularly the “Civil Authority” coverage part of your time element coverage, may allow you to recover for lost business income during the time in which access to your premises is restricted by order of a governing authority.

5 / Retain an Engineer or Consultant If There Is Risk To The Structural Integrity of a Property Owned or Managed by the Policyholder.

Policyholders concerned that Hurricane Helene has affected the structural integrity of their property may want to consider speaking with an engineer or other consultant to help determine whether steps should be taken to preserve the structural integrity of property.  First-party property insurance policies generally require insurance companies to pay for measures that the policyholder takes to mitigate damages, including the cost of an engineer or consultant to recommend or help implement measures designed to mitigate damages, as well as the actual cost of structural supports.

6 / Provide Notice to Your Insurance Companies.

A Policyholder that believes it has a potential claim should give notice to all of its insurance companies as soon as possible.  Late notice can lead to unnecessary defenses and obstacles to an otherwise valid claim.  While the effects of late notice vary from state to state, is best to err on the side of caution in providing early notice to your insurance companies.

Moreover, it is important that a policyholder provide its insurance company with notice even if the policyholder does not have a complete handle on all the particulars of a claim.  Additional information can and should be supplemented when more information becomes known or discovered.  In most, if not all, cases, it may be preferable for the policyholder to instruct its insurance broker to give notice under all insurance policies that could be implicated.

Finally, a policyholder should be mindful that its insurance policy may dictate that notice be provided in a particular way, including on a specific form, by a specific individual, and to a specific individual.  A policyholder is wise to follow such notice requirements.

7 / Document All Loss Items and Emergency Expenses.

Policyholders should put into writing all claim-related submissions, information and communications with an insurance company.  Insurance companies often question, reject and contest loss items submitted by policyholders for reimbursement.  Keeping complete and accurate records of loss items is extremely helpful to ensure that policyholders are reimbursed for all their losses.  In addition, policyholders should use video and photographic evidence to further document damage and losses.

Moreover, the claims resolution process can be lengthy, tedious and often result in multiple requests for the same documentation and information.  Such repeated request not only bog down the efficiency with which the claim is resolved, but also can be a sign of bad faith conduct by the insurance company.  Consequently, a clear, written record of the communications between the policyholder and insurance company can be helpful in the processing in the claim itself, but also in any subsequent litigation that may follow.

8 / Emergency Repairs and Preservation of Property.

Most policies require that policyholders mitigate damages and resume operations as soon as practicable after a loss event.  Measures may include drying out materials to prevent mold, temporary roofing, repairs to prevent additional water from entering the building, and securing the property to protect against injuries or theft.  All such activity and costs should be documented with photos, videos, and other written communications, and policyholders should take steps to keep insurance companies appraised of this activity, as well as provide a reasonable time for the insurance company to inspect the premises before any damaged items are discarded.

9 / Meeting and Extending Deadlines as Needed.

Property and business interruption losses of a magnitude such as those caused by Helene, may well result in claims processes that take insurance companies and policyholders months, if not years, to resolve.  However, insurance policies sometimes require a policyholder to repair or replace property, file a proof of loss, and/or file a lawsuit within a relatively short period of time – sometimes even if the insurance company has not completed its adjustment of the loss.  Provisions limiting the time for the policyholder to provide a "proof of loss", file suit, and/or repair or replace damaged property can be and often are extended by written agreement between the policyholder and insurance company.  That written agreement is referred to as a “tolling agreement” and provides a “time out” and keeps the clock from running out on the policyholder.  Accordingly, policyholders should be mindful of deadlines in their policies and consider whether the nature of the loss and the specific policy provisions warrant a tolling agreement.

10 / Utilize All Available Resources in Submitting and Pursuing Claims.

Given the enormous damages that occurred during Helene, the insurance industry is sure to enlist an army of consultants and attorneys to evaluate Helene-related claims.  Policyholders, especially those with significant losses, should likewise consider marshalling all available internal and external resources in submitting and pursuing their insurance recoveries.

A policyholder’s internal claim team should be identified early and the responsibilities and roles of each team member should be defined in order to efficiently and effectively handle the claim.  Moreover, the internal claim team should have “one voice” in communications with the insurance company in order to avoid inconsistencies in the information provided to the insurance company.

Policyholders should look to various resources in connection with the preparation and pursuit of claims.  For example, forensic accountants, engineers, loss adjusters, insurance brokers and coverage counsel can all provide invaluable services to policyholders, particularly with regard to large claims and claims requiring detailed policy analysis or claim preparation.

The physical cleanup and economic recovery following Hurricane Helene will take months, perhaps even years, to complete.  Although some aspects of the recovery are not in the control of those impacted by the storm’s devastation, the resolution of insurance claims need not be entirely out of the policyholder’s control.  By following these tips and remaining resolute in the pursuit of their claims, commercial policyholders can efficiently and effectively obtain a full recovery for their hurricane-related losses and return to business as usual.