September is National Preparedness Month in the United States. This designation urges organizations and individuals to prepare for disasters and emergencies. Given the increasing frequency and severity of natural disasters, insureds could use this month to conduct a three-step insurance assessment focused on coverage for natural disasters and emergencies. This assessment can provide a valuable supplement to the normal insurance policy review during policy procurement and renewals.
First, confirm that your organization’s insurance policies are secure. All policies should be maintained in an online platform that can be accessed from outside a disaster area, e.g., storage on a cloud platform. The organization’s own insurance policies should be stored in waterproof safes or cabinets. Other entities’ insurance policies that name your organization as an additional insured should also be secured both online and in a waterproof location. Because emergencies can happen at any time and at any location, maintain a comprehensive and updated policy inventory.
Second, review your organization’s disaster relief plan with a focus on insurance. Does it incorporate any disaster or emergency support tools provided by your insurers? Does it identify the contact information for those resources as well as for brokers and coverage counsel? Although your insurers may offer some support if disaster strikes, does your disaster plan include additional mitigation steps after the disaster? Does it incorporate the information necessary for claims submission? Does it provide a means to communicate insured losses to organization stakeholders responsible for insurance claims submission?
Third, reassess your insurance policies for disaster and emergency coverage. Will coverage be available if disaster strikes? Did you purchase adequate limits? Are any sublimits problematic? Do your commercial property policies include business interruption and contingent business interruption coverage? Do they include off-premises utility service interruption coverage? Confirm that your insured property inventories are up to date. Are all properties and organizations included as insureds? Are recent acquisitions identified and insured? Do your claims-made policies provide a grace period to submit claims if a natural disaster occurs? Ensure that you survey your entire insurance program and not just your commercial property policies.
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Taking just these three steps during National Preparedness Month provides an important backstop for insureds. These steps are particularly important for insureds that renew different lines of coverage at different times, e.g., commercial liability one month and commercial property three months later. Examining all coverages with a focus on protection for natural disasters and emergencies will reduce the possibility of unexpected gaps or deficiencies in coverage and will allow time for thoughtful analysis without the typical rush that occurs during insurance renewals.