Dallas and San Antonio Business Interruption From Storm Damage
Understanding How a Business Interruption Claim Works After a Texas Storm
When a major storm system hits Texas, your business could lose days or weeks of revenue while you work to repair your structure or get operations back on track. Whether your company has been affected by a winter storm, a tornado, or another natural disaster, a business interruption insurance claim can help you get the funds you need — if you can get the company to pay. At Stormlex Law Group, we help business owners understand what insurance policies cover and how to get the maximum benefits when disaster strikes.
What Types of Storms Can Cause Business Interruptions?
Texas experiences various weather conditions, from long dry spells with intense heat to large tornadoes and Gulf Coast hurricanes. In recent years, Texas has even seen some winter storms that have resulted in burst pipes, impassable roads, and other hazards for business owners. Any major weather event can cause significant physical damage to your property and interrupt your normal business operations.
Hurricanes
Hurricanes bring high winds, torrential rains, and the potential for devastating floods, especially along the coastline where storm surge is possible. As the storm moves inland, it can also spawn severe thunderstorms and tornadoes. If a hurricane damages your property or impacts the larger area of your business, such as through utility interruptions, it could leave your business unable to continue normal operations for weeks, significantly affecting your finances.
Severe Thunderstorms and Tornadoes
Weather systems bringing severe thunderstorms and tornadoes move through Texas regularly, especially during the spring and summer months. These storms can bring lightning strikes, strong winds, and hail that can all cause substantial damage to your business. If the power is out or the roof or windows are damaged, it could take several weeks for repairs and for your company to get back to regular operations.
Winter Storms
Because buildings and the larger infrastructure in Texas aren’t made with cold temperatures or snow and ice in mind, when a winter storm comes through, it can cause massive business interruptions. This happened in February 2021 with a winter storm that led to billions of dollars in damage due to record-low temperatures and snow and ice accumulation. Power outages kept businesses from operating normally, and there were significant disruptions to the supply chain.
What Types of Business Interruption Insurance Coverage Are There?
Business interruption insurance is a way for companies to recoup some of their financial losses if their business can’t operate for an extended period. There are four main types of business interruption insurance, and they vary in what they cover.
Business Income Coverage
Business income coverage is the foundation of most business interruption policies. It reimburses your business for any lost income resulting from the time when your business was unable to operate after suffering physical damage from a storm. The value of the lost revenue is generally calculated by using an average of historical earnings, and ongoing operating expenses, such as payroll and rent, can be factored in as well. In some cases, there is a waiting period of a few days before business income coverage starts to apply.
Civil Authority Coverage
Civil authority coverage applies when the government blocks access to your business. This can happen after a storm due to flood waters in the area or a gas explosion after a tornado hits the commercial district, for example. To qualify for coverage, there must be a government-mandated denial of access to your building or service due to a covered peril.
Contingent Business Interruption Coverage
When a natural disaster strikes, it can have far larger effects than just your company’s physical location. For example, in the case of the major winter storm, roads were impassable, leading to disruptions in the supply chain. Even if a business was able to stay open, it may not have had goods to sell or supplies to deliver services. Contingent business interruption insurance covers this gap.
Extra Expense Coverage
If you were able to keep your business operating but had to take on extra expenses to do so, extra expense coverage can reimburse you for those costs as part of your claim. Suppose your coffee shop loses power after a thunderstorm, but you rent a generator to keep your cooler and appliances running. Those expenses may be covered through extra expense insurance.
Business interruption coverage can be complex, and you need to know exactly what coverage your insurance company provides before you submit a claim. Our attorneys are experienced at reviewing business interruption policies to determine the scope of coverage and what compensation you could be entitled to.
What Are Some Common Bad Faith Tactics of Insurance Companies?
In a perfect world, you pay your insurance premiums, and the insurance company reimburses you when you have a claim. In reality, insurance providers often deny, undervalue, or delay your claim, and they may even misrepresent your coverage to avoid payment. Fortunately, Texas insurance laws outline how insurance companies must behave when someone files a claim, including how long they have to act and what information they have to provide when they deny a claim.
If the insurance company violates any of these laws, it may qualify as acting in bad faith, which allows you to file a lawsuit to recover compensation for your claim and other expenses. Some of the common tactics insurance companies use in these scenarios include:
- Failing to meet the deadlines for handling and processing a claim
- Denying a claim with a reason
- Intentionally undervaluing claims
- Failing to conduct a fair investigation of the claim
- Refusing to participate in reasonable settlement negotiations
If you’ve been fighting with the insurance company to get your claim approved, hiring an attorney can be the next step. An experienced business interruption attorney can help you identify and compile evidence of an insurance provider’s misconduct to make a complaint with the Texas Department of Insurance or file a bad faith lawsuit in civil court.
What Steps Should You Take When Business Interruption Insurance Claims Have Been Delayed or Denied?
The decisions you make and actions you take during the insurance claims process can impact whether your claim is approved or denied and how quickly you get paid. Taking prompt action by notifying your insurance company of the business interruption as soon as possible can ensure you meet any applicable deadlines and have time to respond to any requests for additional documentation without delaying your claim.
If your claim has been denied or unreasonably delayed despite your best efforts, the first step is to seek legal counsel. An attorney can determine if you have potential grounds for a bad faith claim and what your options are for remedying the situation. It’s also important to document every communication, whether it takes place over the phone or through email, and keep copies of any paperwork you submit, such as expense receipts.
The next step is to escalate the claim internally. There may be an administrative review process or a way to appeal the denial so that a supervisor or independent adjuster can evaluate your claim. If this isn’t successful, it may be time to consider reporting the insurer to the Texas Department of Insurance or filing a bad faith lawsuit.
Communicating with the insurance company in writing can help you establish a paper trail, but if you have retained an attorney, they may be able to talk to and negotiate with the insurance company on your behalf. It’s important to always follow the guidance and legal counsel of your attorney to protect your rights and interests.
Get Help Enforcing Your Business Interruption Policy
Business interruption claims often involve layered coverages, complex valuation methods, and insurance companies that are doing everything they can to avoid paying out your claim. Working with an attorney who has experience in this area and a strong track record of success helping other businesses get paid can help resolve matters.
If you have questions about your business interruption coverage or need help appealing a denied claim, call Stormlex Law Group at (877) 890-6372.