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Lessons Learned From Harvey

By September 19, 2017Property

We Lived and Experienced The Golden Rule

Disasters often have a way of striping away our pride, prejudice and misconceptions of others and levels the playing field in ways we possibly could not see otherwise.  We had neighbors helping neighbors, families being helped by total strangers, church groups working together only to find out later they were from various denominations, and others just randomly showing up wanting to help.   Jesus teaches us the same thing – to treat others without prejudice and with kindness; after all we’re performing these acts of kindness for Him.

Business Income Explained

Ranking as perhaps the most asked question we had – if we had to close our church due to the weather or at the suggestion of local authorities, can we claim loss of income (i.e. Business Income)?  As you may know, most policies contain a two part coverage referred to as Business Income/Extra Expense.  Extra expense is a reimbursement of additional or extra expenses you incur in the event you had to, for example, relocate your services to another facility due to a covered loss.  In most scenarios, this is likely your largest exposure of this coverage line item.  But let’s focus on Business Income, the one more misunderstood.

There are typically three qualifying criteria associated with Business Income.   One relatively obscure provision

  1. Perhaps most importantly, your building must have sustained damage by a covered peril (fire, lightning, windstorm, hail, vandalism, etc.).  There is also one relatively obscure provision contained in many policies where eligibility is determined if your “business” is shut down by civil authority action (for example, an area that had a mandatory evacuation).
  2. In addition to the above, the majority of policies will have a 72 hour “waiting period” before the business income eligibility kicks in.
  3. And finally, you must have incurred a loss of income.  With this coverage, it’s not a check the insurance carrier is writing tomorrow.  They will look at past records to determine average tithes and offerings and they will look forward in subsequent weeks to see if people made up those tithes and offerings.  If in the end it can be proven you did incur a loss of income, subject to the other two criteria noted above, you may seek reimbursement of that.

Be sure and consult with your insurance agent to understand the level of coverage you have for Business Income/Extra Expense.  Most carriers will provide some form of coverage automatically but you may determine that amount needs to be increased.

Flood Insurance Basics

If you incurred flooding at your church or in your home, we extend our sincerest regrets.  That kind of loss is tragic in so many ways and we hope you never have to experience that again so we share the following information sensitive to what you’re going through but also sharing so that others might know.

  1. Most Policies Do Not Cover Flood or Rising Water Damage:  I guess that pretty much explains it so just know that if you desire coverage for flood or rising water, you will need to purchase a separate flood insurance policy.  Occasionally a company may have limited coverage built into their policy but those that do typically have nominal coverage limits and/or coverage is subject to a relatively high deductible.
  2. Commercial Flood Policies Do Not Cover Multiple  Buildings:  If you have a single flood insurance policy but have multiple buildings, policies through the National Flood Insurance Program will provide coverage for only one building and that building is typically identified on the policy so you don’t often get to choose which building it applies to.  According to National Flood Insurance guidelines, you must purchase a flood insurance policy for each building you desire coverage for.
  3. Contents Coverage Under A Flood Policy Is Not Automatic:  Simply put, if you want coverage for contents within a building, be sure your flood policy includes contents coverage.
  4. Is Commercial Flood Insurance Covered At Replacement Value?   The  value of flood damage in the General Property Form is based on Actual Cash Value for losses to the insured building and contents.  Actual Cash Value is the cost to replace an insured item of property at the time of loss, less the value of its physical depreciation.
  5. How Much Is Flood Insurance:  This will vary depending on if you’re in a “low risk” or more “high risk” flood zone area.  Obviously with Harvey, all bets were off the table in terms of what was or was not low or high risk, but generally speaking your address is mapped according to how likely it is to flood or not and the insurance premiums are calculated accordingly.  If you’re in a “high risk” flood zone area (most often that would be an AE zone), you will need to obtain what is called an Elevation Certificate prepared by a licensed surveyor to obtain accurate and the least expensive flood premium and those premiums can vary according to the particular elevations.  If you in a lower risk flood zone area, you would be eligible for the National Flood Insurance Program’s “Preferred Risk” policy.  With this program, coverage starts at $50,000 and goes as high as $500,000.  At the minimum limit of $50,000 on the building and $50,000 on contents, the current annual premium for that policy is $929 annually with a $1,250 deductible – $3,323 at the maximum $500,000 limit for both building and contents (assuming without a basement, contents limits do not have to match the building limit).

My Building Is Leaking From All The Rain – Am I Covered?

The simplified answer to this question is this – on the majority of coverage forms, if water enters your building the building must first sustain damage by a covered cause of loss (fire, lightning, windstorm, hail, vandalism, etc.) to its roof or walls through which rain enters.  In other words, just to site a couple of examples, there must be damage to the shingles or roof which caused water to enter or there must be a hole made such as from a falling tree or limb that caused water to enter.  If none of these, there is generally no applicable coverage.

If you have any questions on any of the items above or if we need to discuss these as they might apply to you, please let us know.  We pray that we won’t forget the positives we learned from Hurricane Harvey and our prayers and service will continue for everyone.