Last year’s Katrina-Rita disasters left behind many obstacles to recovery for businesses and with the start of another hurricane season, companies need to prepare for a another wave of predicted natural catastrophes, according to Dallas-based Haynes and Boone LLP Insurance Coverage Practice Group.
Simply finding available insurers has become much more difficult, the group says, and even when carriers can be located, some now offer much lower coverage limits.
“The property insurance market has changed dramatically as a result of last year’s storms,” said Ernest Martin, head of the Insurance Coverage Practice Group, in a published statement. “Additionally, disputes with major insurance carriers over last year’s disasters are just beginning to mature as we embark upon this new hurricane season.”
Many companies are still combing through and, where possible, negotiating important provisions of insurance policy fine print that will result in major ramifications for hurricane and flood damage relief this year and beyond.
“The devil is in the details,” Martin said. “Each document is different. We have had to help our clients grasp the nuances of disaster and business interruption coverage available under their policies. And, in the case of Katrina, its magnitude and peculiarities led to coverage issues that are seldom raised.”
Businesses would be well advised to take important steps as the 2006 season gets under way, according to Martin. Among them:
• In securing renewal coverage, a company should take steps to negotiate more favorable terms where possible.
• Understand policy exclusions and how they work. Mold and flood exclusion clauses alone can wreck attempts to rebuild.
• Investigate current deadlines concerning existing claims. Texas and many other states require that insurance companies investigate and settle with clients within a reasonable period of time. Knowing about those pressure points could prove vital.
• Secure commitments now from forensic accountants and other professionals needed during the recovery process.
Source: Haynes and Boone LLP
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