Hurricane season 2016, part 1: Your insurance policy and emergency plan

While meteorologists define hurricane season as June through November, the so-called peak hurricane season generally lasts from August through October, when Atlantic (and Hawaiian) waters are warmest, and conditions for large tropical cyclones are at their prime.

As of this writing, meteorologists have projected 15 named storms in the Atlantic region for 2016, with about four of them strengthening into hurricanes, two of them classified as major.

This week, we’ll be talking about how you should prepare for a hurricane or tropical storm. First, we’ll cover the pre-warning prep: the stuff you should be doing all year to protect your property and your residents. Later this week, we’ll talk about what you should be doing once the storm is named and rolling toward the coast.

First, Double-Check Insurance Coverage

Ensure you have windstorm coverage on any properties along the coast, and for at least 50 miles inland. If you live somewhere flat (like Florida, Louisiana and Texas), you may have to expand that zone. And, word to the wise: if there’s already a named storm on it’s way, you may not be able to buy coverage—you must purchase windstorm/hurricane insurance when things are quiet. A 30-day exclusion period is common.

Be sure to ask the following questions:

• Does your insurance policy cover all risks (except those specifically excluded in the policy)? Or is coverage limited to “named perils?”
• Does your policy cover business interruption? This coverage would reimburse you for lost rent due to a covered peril, up to the limits of coverage.
• Do you have the liquidity to continue to function in case of an emergency? You may secure a prearranged line of credit to provide that needed liquidity in an emergency (especially to cover your deductibles, see below).
• What’s your deductible? It may be much higher than other hazards, even on the same policy. Most hurricane policies issued today set the deductible as a percentage of the total loss amount, somewhere between 1 and 10 percent.
• Does your policy cover the full replacement costs of destroyed property or structures? Or will the payout subtract a large amount for depreciation? For example, if your roof is 15 years old, the insurance payout on a so-called fair value settlement will be just a fraction of what it costs to replace the roof.
• If you have a lower-cost premium, will it be adequate protection? Strong insurance carriers can afford to pay claims swiftly; weak carriers are more likely to fight you. Look for insurance companies with high ratings for financial stability from A.M. Best or Standard & Poor’s.
• Do your renters have their own insurance? Even if you can rebuild your property because of a swift cash settlement, your renters’ may not be able to afford to: with no renters insurance coverage, they will need to start over without any liquid cash. That may mean moving in with family and breaking their lease.

Then, Evaluate Your Emergency Plan

1. Line up ‘first response’ and/or contingency contracts with key vendors (roofers, landscapers, maintenance companies, electricians, water damage mitigation firms). That way, you’ll have a priority on their services in the event of a hurricane. You’ll have to pay a little bit more for this, but if a crisis hits, you’ll be grateful for it.
2. Inspect storm shutters. If you use plywood to protect your windows, be sure to inventory the sheets. Every window should have a sheet assigned to it, so you can get them up quickly, with no confusion. If you’re missing a plywood sheet, have a new one made, ahead of time. Don’t wait until the wind starts to pick up!
3. Develop your emergency communications plan. How will you contact people if power and phones are out? How will your residents contact you? Acquire a backup communication plan for staff, like two-way radios, that will work if cell towers are down.
4. Get a generator. It should be at least sufficient enough to keep the office running (for several weeks in the case of severe storms). If you already have a generator, inspect it, make sure it runs, change the oil and fuel if it’s been idle for a year.
5. Inventory your first aid kits. If you don’t have any or you’re running low on supplies, now is the time to get them stocked up.
6. Familiarize yourself with local evacuation plans. Identify the designated storm shelters in your community.
7. Inspect drains and sump pumps to make sure they’re in working order. Inspect carports, storage sheds and canopies for structural soundness and make any repairs.
8. Consider forming a Citizen Emergency Response Team. And invest in getting the appropriate first aid training for your staff.
9. Keep a digital camera charged up. You may need to take photographs of storm damage for insurance and other purposes, and you’ll want to save your phone battery for communications with residents, staff, and vendors.

Once your emergency plan is in place, don’t hesitate to share the information with residents via a newsletter.

If you’ve done all of these things, you won’t have to panic when the storm warning hits. But, once it does, you’ll need to enact all of your plans. Later this week, we’ll talk about communications and safety measures you can take during and after the storm.