The effects of cold weather and winter storms (snow storms, ice storms, blizzards) are a leading cause of business interruption. A recent report identified the top 10 most common and costly property and liability claims for small businesses. In the past five years, 15 percent of small businesses have experienced damages caused by water and freezing. The average cost of these claims is $17,000. An additional 15 percent of small businesses have had claims for wind and hail damage. These claims cost an average of $26,000.
Common Types of Winter-Related Damages
Winter-related damages can affect any business, regardless of the type or size of commercial property. Some of the most common types of problems that occur from severe winter weather and prolonged cold, snow, and ice, include:
- Damage to contents, inventory, and equipment caused by significant temperature changes.
- Water damage caused by pipes freezing and bursting.
- Wind damage to roofs, buildings, and landscape.
- Fire suppression efforts delayed by inaccessible fire hydrants (covered by snow or ice).
- Frozen fire suppression sprinkler pipes, resulting in flooded rooms and malfunction of system.
- Ice damming, resulting in damage to roof and gutters.
- Injury to guests and employees.
- Loss of revenue (business interruption).
Prepare Now to Avoid Damage Later
When a business cannot fully function, profits are affected. When cold weather damages occur, business owners and managers are left dealing with repairs and downtime, rather than running their business. Taking preventative actions now, while the weather is warm, can help prevent a lot of problems from occurring later during cold weather. Preparations should include making repairs to your property as well as developing a business continuity plan.
Prepare and Repair Your Property
Maintenance is an essential element in protecting your commercial property. Here are a few recommendations:
- Before cold weather sets in, drain water from all systems and equipment not needed in winter months, including landscape sprinklers and air conditioning units.
- Check for and repair damages to the roof. Make sure roof drains are clear and in good condition. Clear rain gutters to ensure proper drainage. Make sure downspouts are intact and draining in areas away from foot traffic.
- Inspect the exterior of the building for gaps and seal appropriately to prevent weather (and critters!) from getting inside.
- Trim tree branches and landscape that might come in contact with the building in the event of heavy snowfall or ice accumulation.
- Make sure the heating system has enough fuel for expected conditions and a back-up (when possible) in case of an emergency.
- Maintain a temperature of at least 45 degrees Fahrenheit in unoccupied facilities, attics, and basements. Place thermometers in different areas throughout the building to identify places that may need additional heat or insulation.
- Make arrangements for snow removal with a reputable company before winter starts – don’t wait until the storm hits and you are buried under a pile of snow. Choose a dependable contractor whose equipment is in good condition and who will keep detailed records of their work. Discuss snow removal from the roof to determine if they will meet this need or if you will need to make other arrangements. Identify an area where snow should be moved to. To avoid damages from snow removal equipment, mark curbs, fire hydrants, drains, speed bumps, and other features that may not be visible under a layer of snow.
- Make sure you have sand, ice melt, and shovels on hand for winter maintenance that won’t be covered by your snow removal contractor.
Develop a Business Continuity Plan
A business continuity plan addresses different types of risks that may occur and identifies how you will respond to keep your business running as smoothly as possible. Here are steps you should take as you develop your continuity plan:
IDENTIFY POTENTIAL RISKS. Outline the different risks that your business faces. These may include loss of heat, frozen pipes, or inability to access the facility due to stormy weather. If you had to shut down the business for a few days, what would happen? Who would need to be notified? Also, take a good look at your business property. Are there any upgrades or improvements you could make now to prevent or lessen damages from future weather conditions, storms, or natural events?
CALCULATE THE COST OF BUSINESS INTERRUPTIONS for one week, one month, and six months. Once you’ve done that, discuss your business interruption coverage options with your insurance agent. It is also a good idea to build a cash reserve that will enable your company to stay in operation while recovering after a disaster. Identify alternative vendors you can use if your primary vendor is unable to meet your needs after a disaster. Develop a relationship with these vendors and place occasional orders so they regard you as an active customer when the need arises to purchase from them.
REVIEW YOUR INSURANCE POLICY with your agent to determine if you have the right coverage for your needs. Review your business interruption cost calculations with your agent as well. Make sure you understand what your policy will and will not cover. It’s a good idea to know the value of your property to ensure that you have enough coverage.
DEVELOP AN EMERGENCY COMMUNICATION PLAN. This should include steps you’ll take to make sure your employees, customers, vendors, and contractors know what is happening and what to expect. Maintain an up-to-date list of email addresses and phone numbers for employees and everyone you do business with. Establish an email and/or text message alert system that you can utilize in the event of an emergency. Plan content you can use on your company’s social media platforms to let the public know you are still in business and are in the process of recovering after the disaster.
DEVELOP A TELEWORK POLICY. In the event your employees are unable to get to work due to a winter storm or other disaster, consider telework options that will allow them to continue work from home until things return to normal. For more information, read “How to Make Telework Work for Your Small Business”.
If You Suffer a Loss
If your business suffers winter-related damages, here are a few things to keep in mind:
- Contact your insurance agent as soon as possible after the loss occurs. Explain what has happened, what damages have occurred, and what you have done to prevent further damage to the property. If you need an emergency mitigation vendor, your agent can give you some recommendations.
- Be thorough in showing the claims adjustor all damage that has occurred.
- Save copies of all invoices and receipts for emergency or temporary repairs. Provide this information to the claims adjustor. Keep records of work you have done to protect from further damage.
Remember, you have a duty to mitigate losses. Taking action now to prepare will help prevent or reduce the amount of damage that occurs to your business in the event of adverse winter-related conditions. Early preparations will also make the recovery process run more smoothly. Contact your Leavitt Group insurance advisor to learn more about protecting your business.