"Days of shivery" ahead highlight coverage gaps

"Days of shivery" ahead highlight coverage gaps | Insurance Business America

"Days of shivery" ahead highlight coverage gaps

It’s time to batten the hatches—winter weather is on its way. According to the Farmers’ Almanac, “the days of shivery are back” and winter 2013 will bring copious amounts of rain and snow to businesses and homeowners across the country.

Although 2012 was relatively mild, damages from winter storms have increased by about 50% since 1980, Munich Re estimates. In terms of total property/casualty claims, winter weather claims accounted for 7%.

In the face of these numbers and weather projections, Michael Barry of the Insurance Information Institute suggested producers should be preparing their clients now for the storms ahead.

“In most parts of the country, the weather’s still pretty nice so people can do the basics like clearing the gutters or getting their policies in place,” said Barry. “I think agents and brokers should walk through potential perils that their clients could be exposed to as well as the various scenarios in which they can be protected.”

Those scenarios of protection all depend on having the right insurance coverage in place, Barry said. While most people have the appropriate homeowners and comprehensive auto policies in place, there are a few forms of coverage clients may not think about. One is flood insurance.

“People who look at themselves as inland don’t always recognize they’re at risk [of flooding],” he said. “But if they live near a creek or river, there could be overflow or a dam break and there will be a flooding event.”

With heavy rain and snowfall predicted this winter, flooding events may be especially likely. Producers will need to sign clients up soon, since the National Flood Insurance Program requires a 30-day waiting period before a policy goes into effect.

Another area to look at for commercial clients is business interruption insurance. While most mid-size businesses carry some form of business interruption insurance through a business owners policy (BOP), additional coverage may be necessary for truly damaging winter events. Small businesses may not be covered at all.

“If you incur a direct hit and there’s fiscal damage to your property and you’re unable to operate for weeks, that policy will cover you,” Barry said. “I think that’s something for every business owner to consider.”

These kinds of policy reviews are especially important for people who live in areas prone to heavy, continuous snow and ice storms.

Heavy snowfall over long periods of time causes homes and offices to collapse with the weight, the most famous example being the 2010 collapse of the Metrodome in Minneapolis.

As for ice storms, Barry believes that these winter woes are “anecdotally, the worst.”

“I would say ice storms are, in terms of total economic damage, much broader,” he said. “Now we’re not only talking about property damage, we’re talking about an inability to heat property and keep the lights on.”

Heavy snow fall is most common in the Great Plains region, while the Pacific Northwest sees damaging ice storms almost annually.

Despite efforts from both producers and their clients, however, some loss is unavoidable. It’s best to be prepared for that, too, Barry advised.

“You need to tell clients to take pictures and document the loss, and report it as soon as possible,” he said.