Property Loss Recovery: 10 Critical Steps Businesses Should Take After a Disaster

Critical steps businesses should take immediately following a disaster for property loss recovery.

A property loss can be devastating, and mistakes made in the early stages of the claims process can significantly affect a business’s ability to recover. Consider keeping a copy of this checklist in an off-site location so it can be accessed quickly in the event of a disaster.

Prioritized Next Steps

Immediately following a loss, the primary goal is to prevent further damage and stabilize the property.

1. Policyholders have a contractual duty to mitigate the loss. This includes everything from posting a fire watch after a small fire to removing snow from a sagging roof. Most insurance policies contain provisions that may exclude additional damage if reasonable mitigation efforts are not taken. Mitigation efforts may include covering equipment to prevent further water damage, relocating assets to prevent theft, fencing off the property, or hiring security personnel.

2. Call your insurance agent. You can also call the carrier, as the claims phone number is usually on the first few pages of the policy. In many cases, policy documents may be stored inside the facility, which may be inaccessible after a loss.

3. Don’t disturb the damaged area after mitigating any further loss. The carrier has the right and will send a cause-and-origin inspector to determine what caused the loss. Don’t start repairs/ clean up debris, or in any way change the damaged area, except for a water loss, where you can hire a restoration company to remove water. This is huge. Don’t be surprised, as it might seem as though they are investigating you. Arson can be excluded if you are involved, so that needs to be confirmed first. It may look like they are trying to get out of paying the claim, but the carrier has reinsurers they need to answer to. They need to ensure there are no blatant reasons to deny the claim, such as a shut-down sprinkler system where they were not notified, etc. Most carriers are not trying to avoid paying the claim.

4. Document everything. I would write down the events of the claim as you can remember them.

5. When will I hear from the carrier? A carrier for a property claim will reach out within 24-48 hours. This will seem like a lifetime. Again, we cannot touch the scene until the adjuster gives permission.

6. What can I do? You can:

a. Document any orders you cannot fulfill.

b. Line up but don’t have them start:

1. A restoration company like Bluesky, Servpro, etc.

2. A contractor for debris removal and reconstruction.

3. Start talking with your local zoning officer

(code changes).

4. Begin searching for new equipment.

5. See #9 below

c. If you have business income with additional expenses, you can begin looking for rental equipment. Depending on the loss, a rental generator/ Boiler, etc., may help keep you operational. I have had clients outsource boiler fuel to keep their kilns running. Remember, don’t assume something will be covered. Everything you want covered needs to be approved by the adjuster first. This step is mostly about making phone calls to stay ahead of the game, so that once we are cleared to remove debris and rebuild, we haven’t lost three weeks.

7. Calls from private adjusters: You will begin receiving calls from outside adjusters offering to help with your claim. This may make it seem as if they are with your carrier or your agency, so vet them thoroughly. I will go into a lot here: hiring one will likely yield you a higher return on your claim, but most of the time, it extends the length of the claim and will sour your relationship with your carrier, and they charge for their service. The longer the claim goes on, the less likely you are to recover from it.

8. Activate your Business Continuity Plan: Determine whether you need to relocate to maintain operations temporarily. Communicate clearly with employees, customers, and lenders about your status and expected timelines.

9. Communication: Adjusters can be great or not-so-great, so you or your agent needs to manage this aspect. The biggest thing I can tell you is to get approval in writing for anything you want covered and end any conversation by specifying when you will hear from them again (exact date/time), what the next steps are, and who is responsible for them.

10. Open a separate account for fire-related reimbursement. We highly recommend an insurance appraisal and taking pictures of your operation before an event. This will not only expedite your claim recovery but also remove coinsurance penalties for being underinsured. Lastly, developing a business continuity plan is the best way to ensure employee and customer retention and to get back to business.

By KEVIN MERSHIMER, CIC, CRM, The Horton Group/MarshMcLennan Agency