Written by Ed Beckmann, Hellmuth and Johnson & Tom Klaers, Clean Response
This article is the second in a series regarding climate change and the risk to commercial properties. The first article in this series was published in the Autumn 2016 BOMA Newsletter.
People involved in insurance claims often refer to an insured event, such as a fire, wind event or hail event, as a “loss.” A loss includes damage but is more than that. A loss is any diminution in value of the property due to an insured event.
One important way building owners and their managers can prepare ahead of time for a loss is to annually inspect the exterior of a building and document the results. Photography of siding, shingles, metal valleys, and vents that are damage-free can help establish when damage to a roof occurred. Such photography need not be elaborate. Simple photographs from an iPhone digitally saved can be sufficient to identify the date of storm damage. A regular record of the condition of the building is valuable in establishing whether a loss is insured. Minnesota property insurance policies do not cover insured events that are more than two years old. For example, the Northwest metro area of Minneapolis has received multiple hail storms over the last ten years. Hail occurring within two years of a claim would be covered by insurance, but hail damage occurring more than two years prior would not be covered. Separating what damage occurred when is often difficult without a record. Some insurance companies use old weather records of large hail hits from years before to argue that recently discovered damage is old and uninsured.
A record of the manufacturers and contractors that installed building components is also useful. Shingle and siding manufacturers often change the composition and look of their products. Discontinued shingles are difficult to match, making full roof replacement often appropriate, but establishing when a shingle is discontinued is not always easy if there is no record of what was installed. The claims process can flow very smoothly if a written record of the manufacturer and model of the shingle is archived. The claims process slows and can be disputed when the material is unknown.
It is wise to have contact information for an insurer at the ready. Prompt notification is required under most insurance policies. Contact information for various trades, including restoration contractors, plumbers, HVAC, cleaning companies, fire sprinklers, electricians, roofers, etc. is important, too. Building owners and managers should have service agreements at the ready for these vendors and they ought to know who to call for after-hours emergencies. Insureds have a duty to mitigate damage and failure to do so promptly can diminish insurance coverage. A significant or even catastrophic event is not the time to search the internet for the proper provider. It is imperative to know who to contact immediately for emergency assistance.
Once a fire, storm, or other insured event occurs, building owners and managers should record who witnessed the incident. Using the example of hail damage to a roof, it can be very helpful to have witnesses who saw the storm (and perhaps photographed it with a mobile phone) describe the extent of the hail storm. Hail stones will quickly dissolve or even disappear, and weather records for a particular location can always be challenged. A solid record of hail stones occurring at the property close in time to the event is helpful to smooth the claims process.
Damage mitigation should be undertaken immediately. Valves on a broken pipe must be closed. Electrical wires causing a hazard should be immediately remedied. However, the principle of remedying exposed hazards should not be extended to remedying most storm damage. An insurance company should be notified and given an opportunity to inspect such damage. Only problems like exposed roofs that lead to greater damages should be immediately addressed.