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    How Does Business Insurance Help Me After A Tornado?

    Posted by Brad Hancock on Jun 4, 2024 11:25:10 AM

    As the sun rose on Sunday after a string of tornadoes hit the Red River counties of North Texas, business owners like Ted began to read stories of the harrowing moments when the tornadoes roared through their towns. These moments were tragic for some, but could have been much worse, considering the extensive damage left in the wake of these destructive forces. Looking at pictures and videos of the trail of destruction left in Sanger, Valley View, and Celina, Ted wondered how his commercial insurance policy would support him if the worst had happened to his business just south of the affected area.

    For businesses in Denton and throughout Texas, the thought of facing a similar disaster scenario is daunting. Especially when thinking about what it takes to work through a tornado damage claim with the insurance company. Ted knows that understanding how his commercial property insurance policy will support him in such an event is vitally important to being able to sleep at night. As Texas' trusted independent insurance agency, we thought it would be helpful for all Texas businesses to understand how commercial insurance protects you from the aftermath of a tornado while it is fresh on many minds. Including Ted's.

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    Commercial Insurance Basics in Tornado-Prone Areas

    Texas commercial insurance policies are designed to help businesses clean up after a tornado, rebuild their spaces where they run their business, and sustain them through the recovery process. The policy language is specifically crafted to handle each step of the process to ensure that businesses have the support they need when it matters most. Whether you have structural damage or just need a temporary location while repairs of your space are being made, the goal is to make tornado damage insurance claims as easy as possible. The insurance company wants to help you so that you can go back to serving your customers in the shortest period of time possible.

    One of the key elements of comprehensive coverage that Ted has is replacement cost coverage on not only his building but also the equipment that he uses in his day to day operations. This type of coverage makes sure that your businesses can rebuild your property to the same standard without worrying about finding extra cash when the budget is pinched the most. In a state prone to significant property damage claims due to weather, having replacement cost coverage is a "must have" for recovering from severe tornado damage.

    High-Risk Areas and Tornadoes

    Texas averages more tornadoes per year than any other state and it is not close. This makes us a high-risk area for these natural disasters whether Ted likes it or not. Texas is unique in that we have several factors contributing to our tornado outbreaks. Some of the most important ones are our geographical location, spring and fall climate patterns, and the prevalence of those big supercell thunderstorms that love to pop up at the worst times.

    The effect of weather due to the geography of Texas is likely underestimated by many, including business owners like Ted. The reality of our great state is that certain areas see more frequent tornadoes due to the environmental conditions of their specific locations.

    • The Panhandle has summer storms that roll off the mountains creating spectacular storms that race across the high plains leaving a path of destruction.
    • The area along and inland from the Gulf Coast can see tornadoes that spawn from hurricanes and other storms that roll in from warm ocean water.
    • The Red River Counties and Dallas-Ft Worth experience dramatic temperature changes in the spring and fall, which can produce big supercell storms that can spawn tornadoes and massive hail.

    Just because we have highlighted these three areas doesn't mean the rest of the state is safe from tornadoes. Texans have to keep their head on a swivel with the weather. But understanding the risk in the area that your business operates in can help you prepare and work to make sure that your commercial insurance policy provides adequate protection from catastrophic damage.

    How Does Business Insurance Help Me After A Tornado?

    Replacement Cost vs. Actual Cash Value

    Let's get back to what we called a "must have" coverage a couple of paragraphs ago. When dealing with a tornado damage claim, it's important to understand the differences between replacement cost and actual cash value (ACV). Replacement cost covers the expense of rebuilding your property or replacing business equipment at current prices, without factoring in depreciation. Actual Cash Value, on the other hand, pays out based on the depreciated value of your property or possessions. This is likely not new information to you and certainly wasn't to Ted.

    Inflation has been talked about a lot over the last 24 months. It has wreaked havoc on budgets for both Texas families and Texas businesses. Stop and think for a minute about replacing your property and possessions after a tornado given what we know about the price of building materials and other items that you will need. It's mind boggling to think about the actual cost of repairs and the additional cost of furniture, finish outs, computers, or replacement machines.

    Replacement cost coverage provides comprehensive protection with a goal that you can fully recover from the disaster even though the average cost of everything has continued to climb. Many business owners have tried to insure their property at less than the total current replacement cost. With the frequency of big weather events causing physical damage to businesses, it seems a rather shortsighted way to attempt to save a few dollars on insurance payments.

    Understanding How Commercial Insurance Pays Tornado Claims

    A Texas commercial insurance policy typically covers three main areas in response to a tornado: building coverage, business personal property coverage, and business interruption coverage.

    • Building or Property Coverage pays for the repair or rebuild of your commercial property. It can also cover temporary repairs to mitigate additional damage from the tornado.
    • Business Personal Property Coverage replaces your business-related belongings. This can include your furnishings, computer equipment, and any specialized tools or machinery that your business may use.
    • Business Interruption Insurance covers lost income and additional expenses incurred if your business operations are disrupted. If you survive the tornado, this optional line item will make sure that you can pay the bills and restart as quickly as possible. 

    There are additional coverages to consider. One that we always recommend is ordinance or law coverage. Most cities have building codes that mandate how partially or fully destroyed property must be handled. This line item covers the cost of complying with those codes during reconstruction. This sort of knowledge is the benefit of using an experienced commercial insurance agent.


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    Filing an Insurance Claim After Tornado Damage

    The goal of an insurance company is to help Texas businesses recover after a tornado as fast as they can. But they will ultimately need your help in the process. Given the chaos of the moment, there are certain things you can do ahead of time to make the process go more smoothly. It's important to have an inventory of your business possessions before a big event occurs. This is done to avoid forgetfulness in the aftermath when trying to compile a list of your possessions.

    Insurance adjusters will work on-site quickly to address needs and help start the cleanup process. Being prepared and understanding the claims process can help you navigate this challenging time more effectively to make sure that you receive the support you need to recover. Having that inventory in a cloud storage option like Google Drive can help immensely. This made sense to Ted. 

    The Claims Process

    The claims process typically involves three steps: contacting your insurance provider or agent to initiate a claim, using available filing methods (online, via app, or phone) to report and document the damage, and providing clear documentation so that the process can move smoothly. This is especially important for business Interruption claims. Understanding this will make waiting for the adjuster's assessment and completion of the claim process much better for both you and the insurance carrier.

    Many large insurance companies will provide immediate checks to cover temporary repairs and needs. This is one way that your tornado insurance claims can shine in a terrible situation. But it's important to be patient, as the entire process can take a year or more to complete depending upon how much damage your business has sustained.

    Get True Texas Business Insurance

    True Texas Business Insurance offers Texans replacement cost coverage for both your commercial property and business-related possessions, whether it is for a tornado or other extreme weather events. The process of obtaining coverage for your business focuses on the value the business owner receives from the policy. When someone like Ted needs to file a claim, they want a promise of certainty knowing that it will be handled correctly. True Texas Business Insurance is available to Texans like Ted to provide customized coverage tailored to specific needs during the insurance claim process. 

    Working with Insurance for Texans

    True Texas Business Insurance can only be obtained at Insurance for Texans. Working with our local, independent insurance agents offers several advantages. We specialize in personalized service and a deep understanding of the specific risks and needs of Texas businesses. The agents at Insurance for Texans work for you, not a large insurance company. We shop the marketplace for you to ensure that you receive the best possible coverage options at the best price.

    Click the button below to see how we can help after a tornado or any other claim situation that you might have.


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    Topics: business coverage, business income coverage, basics of business insurance, property, business interruption, tornado insurance