As attorneys who litigate insurance claims, we’re alerting business owners to the dangers of a ‘set it and forget it’ approach to insurance coverage. Recent events like government shutdowns, supply chain disruptions, and natural disasters have highlighted the importance of regularly reviewing insurance policies.
During the COVID-19 pandemic, many businesses sought insurance relief for losses due to mandatory shutdowns. This experience taught valuable lessons about the impact of market disruptions on commercial property insurance policies, particularly those with replacement cost coverages. Increased labor and material costs can leave properties underinsured if policies aren’t updated.
The North Carolina Supreme Court recently ruled on two COVID-related insurance cases, emphasizing the importance of policy language. In one case, ambiguous policy language led to coverage for losses due to government orders, while in another, explicit exclusion of viral contamination meant no coverage. These rulings show how crucial it is for business owners to understand their insurance contracts.
Hurricane Helene exposed significant gaps in flood insurance coverage for many businesses. Even areas not mapped as flood zones were affected, highlighting the need for businesses to consider flood insurance beyond the National Flood Insurance Program (NFIP) limits, which are capped at $500,000 for buildings and contents.
To manage risk effectively, businesses should regularly assess their insurance portfolios and update them as needed, especially when changes occur within the business or new market risks emerge. This proactive approach can be the difference between receiving claimed benefits or facing uncovered losses.
