Understanding the Financial Issues of a Business Interruption in the Aftermath of a Hurricane
By John Welty President, SUITELIFE Underwriting Managers, Ryan Specialty Group | December 2016
Hurricanes can be frightening experiences, particularly for those on the coast. For hotels, which occupy much of the country's coastal landscape, they can bring revenue to a halt. Business interruption coverage is key to help hotels get through these catastrophes without having to board up their businesses for good. To ensure they are properly protected, hotels should understand the financial issues that could arise as a result of a hurricane, and the myriad coverages that are available to assist with those costs. In this article, we explore the ins and outs of business interruption coverage to help hotel owners question their coverage and ensure they have the protection they need to come out on top after a major loss.
Hurricane Matthew – Business Interruption in the Aftermath
It brought winds of 105 miles an hour to Cape Canaveral, Fla., nearly 17.5 inches of rainfall to Savannah, Ga., and a storm surge of nearly 10 feet above normal to Fernandina Beach, Fla., according to Weather.com Insurance Journal" damage along the southeastern coastline reported by the insurance industry could reach $10 billion'.
Hurricane Matthew brushed the coasts of Georgia and the Carolinas at a distance of 50 miles.
But, despite its strength as a Category 2 and 3 storm, Hurricane Matthew didn't cause nearly the damage many had anticipated, or even close to the damage achieved by its predecessors – Super Storm Sandy, Hurricane Katrina, or Hurricane Andrew just to name a few. For coastal communities, major storms like this can present not only a danger to life itself, but a threat to livelihoods and businesses – and hotels are no exception. One way hotels can protect themselves from these major storms is by identifying the right insurance and understanding their coverage options. Business interruption coverage can be especially critical to hotels during and after a major catastrophe.
Making the Best of Business Interruption
Getting the most from business interruption coverage after a catastrophic loss requires – from the beginning – a thorough working relationship with the hotel owner, risk manager, a forensic accountant specializing in insurance claims, broker and insurance carrier. Hotels are a unique business within the insurance industry and must be treated as such.