Do Your Small Business Clients Have the Right Insurance to Weather a Winter Storm?

Winter storms are second only to hurricanes and tornadoes in terms of insured dollar losses: about $1.25 billion per year. Unfortunately, many small businesses owners may not understand the risks that winter storms pose to their businesses. While property damage may be the most obvious hazard, they need to be aware of other risks, including:

  • Equipment damage
  • Loss of income if the business is unable to operate
  • Liability for damages or injuries

As insurance agents, it’s our job to help our small business clients assess these risks and choose the right policies to protect their businesses.

Property damage

The most common property damage caused by winter weather includes:

  • Roof damage – Heavy snow and ice can put incredible strain on roofs, particularly the flat roofs that cover many commercial buildings. Winter newscasts are often filled with “collapsed roof” footage; these are almost always businesses, not residential structures.
  • Water damage – This is caused mainly by:

o Burst pipes – When water freezes, it expands. This expansion is powerful enough to crack pipes made of metal or plastic – and the resulting damage from water pouring out of leaking pipes is usually extensive and costly.

o Clogged gutters, i.e., “ice dams” – Ice dams occur when melting ice and snow can’t flow freely through gutters. Water backs up behind these frozen dams and with nowhere else to go, seeps into ceilings and walls. It’s typically a mess – and expensive to repair.

Business owners are often presented with basic property coverage that covers “named perils” such as lightning, windstorms, explosions, fire, smoke and others. However, it’s important to note that the named perils may not include falling objects – including roofs – or water damage.

Coverage options

To help your clients cover this “insurance gap,” make them aware of these coverage options:

  • Broad-form property policies- These policies typically cover the “usual suspect” named perils, but can also include collapsed roofs and water damage.
  • “All-risks” policies- These policies cover businesses for property damage or loss due to just about any cause, with a few unlikely exceptions: war, nuclear hazards and the like.
  • Business owners package (BOP) policies – For small businesses needing $10,000 or more of coverage, a BOP is often the right choice. BOP policies cover property and equipment, loss of income, expenses, liability and more.

Other ways to help

Making sure clients have the winter insurance they need is a great service. But you can also help them by asking what they’re doing to prevent winter disasters. These questions might include:

· “When’s the last time you had your roof inspected?”

· “Do you clean your building’s gutters regularly?”

· “Are the water pipes in your building insulated?”

Take the time to show your small business clients that you’re looking out for them. Your effort will be rewarded with long-term, loyal clients for years to come – through all kinds of weather.