The eruption of Mount Kilauea in Hawaii is a reminder to businesses that they can be vulnerable to nature’s destructive forces. Take a look at this story to understand why it is important to review your business insurance and make sure it covers your business needs.
The eruption of Mount Kilauea in Hawaii is a reminder to business owners, even those nowhere near any of the 169 volcanoes in the U.S., that they could be vulnerable to nature’s most destructive forces. And that they need to be sure they’re insured against disasters like tornadoes, earthquakes, hurricanes and flooding.
But while damage from some disasters like tornadoes is covered by standard business insurance policies, losses from others may not be. But business owners do have alternatives, including insurance plans created by the federal or state governments. The drawback: Special coverage can be expensive and many owners may decide to take their chances and do without.
Insurance policies can be complex, covering only certain types of damage. These are some of the basics about natural disasters and insurance:
Most business insurance policies provide coverage for property loss following a volcanic eruption if the damage was caused by a volcanic explosion, shockwaves, ash, dust or lava flow, according to the Insurance Information Institute, an industry group. However, most insurers won’t sell volcano coverage to businesses or homeowners inside what are known as lava flow hazard zones. Owners in Hawaii do have an alternative: coverage from the Hawaii Property Insurance Association, a group of insurance companies created by the state.
Even if owners can get insurance, they’ll find that damage to land, trees and property that’s left out in the open rather than sheltered won’t be covered. If there’s damage from earthquakes, mudslides or other disasters related to the eruption, that also won’t be covered — although some of the damage might be covered under a separate earthquake policy.
Earthquake damage can be covered by insurance, but policies are expensive in areas that are more prone to tremors and some insurers won’t sell it in those regions. What kind of damage is covered can differ from policy to policy, and according to the Insurance Information Institute, deductibles can be as high as 20 percent. Earthquake coverage is sold separately from a standard business owner’s insurance policy.
If you would like to do a policy review, give us a call at 818-365-3139, or contact us here.