Hurricane Preparedness Plans for Businesses

Summary: Big storms, such as Super Storm Sandy in 2012 or Hurricane Katrina in 2005 have caused billions in damage. Your business must be ready for the next big storm that could hit your region. These tips will help prepare your business for hurricanes and severe storms in this article.

The Impact of Severe Storms 

According to the National Oceanic and Atmospheric Administration (NOAA) data, the 2023 Atlantic hurricane season was above normal, characterized by record-warm Atlantic sea surface temperatures and a strong El Nino. There were 20 named storms, seven of which were hurricanes, and three intensified to major hurricanes. The eastern Pacific basin 2023 hurricane season was also above normal with 17 named storms, 10 of which were hurricanes and eight of those major hurricanes.

In October 2012, Superstorm Sandy slammed into the east coast of the United States. According to NOAA’s National Centers for Environmental Information (NCEI), the storm led to 159 deaths and more than $88.5  billion in damages. The storm caused widespread interruption to vital water and electrical services in major population centers up and down the eastern seaboard. Even the New York Stock Exchange shut down for two days, which hadn’t happened since a major winter storm in 1888.

This category 1 storm is the fifth costliest hurricane and the four hurricanes more costly  were all category 3 or 4 storms. What made Hurricane Sandy so uniquely destructive? Several conditions created the perfect storm, with most of the damage related to water and storm surge. Despite relatively low wind speeds, a characteristic of category 1 storms, Sandy grew in intensity when it interacted with another storm system coming in from the west. Additionally, the lunar cycle created the maximum astronomical tide, intensifying the storm surge and causing major flooding.

How to Prepare Your Business for a Hurricane

There are measures you can take to prepare your business properties for hurricanes and other severe storms that can bring high winds and catastrophic flooding.

Know and Address Your Vulnerabilities

Is your staff prepared to handle a crisis? Are your data backup and other systems protected? Do you have contingencies for working remotely, storing equipment and supplies off-site, maintaining supply chains, and other logistical concerns? Take the time to understand how a hurricane or other severe weather event will impact every aspect of your business. Then, take measures to plug the holes.

Pay Attention to Your Location and the Weather

Businesses within 50 miles of the shoreline have a much greater risk of property damage and business interruption than those located further inland. Is your business elevated and safe from flooding or in a low-lying, flood-prone area? Visit FEMA’s Flood Map Service Center for more flood risk information.
 
Many business owners in the mid-Atlantic region who survived milder hurricanes failed to take the necessary precautions to protect their businesses from Sandy. It was a stark reminder that, despite similar weather warnings, every major storm has a unique meteorological footprint that affects its ultimate impact. Stay updated on weather developments by tuning in to National Weather Service forecasts and your local radio and television stations. Most importantly, take weather warnings seriously and follow local officials’ evacuation advice.

Create a Hurricane-Specific Emergency Response Plan

Your employees’ safety should be top of mind. Safety measures include sending workers home before a storm hits. For essential employees who must stay, take precautions to keep them safe from high winds and flooding. Assign emergency roles and responsibilities to specific employees and conduct regular hurricane response drills to avoid panic and chaos when a storm hits your area. Keep emergency supplies, such as battery-operated lamps, battery-powered radios, non-perishable food items, bottled water, and first aid supplies. Ensure you have an operational generator installed with flood heights in mind and properly maintained.

Develop a Business Continuity Plan

A business continuity plan is the best safeguard against a prolonged and possibly permanent shutdown is to plan for potential damages, power outages, road closures, supply chain issues, and other infrastructure and operational issues that can accompany severe storms. Having a plan to resume operations in an alternate location or having employees telecommute can help you restore critical business operations more quickly. Also, be sure to include the safekeeping of critical data in your business continuity plan.
 
According to the Federal Emergency Management Agency (FEMA), nearly 40% of businesses forced to shut down for at least 24 hours due to a disaster never open their doors again. After a disaster, 90% of smaller companies fail within a year unless they can resume operations within five days.

Make Communication a Priority Before, During and After a Storm

Having a crisis communication plan is paramount during all phases of a crisis.  

• Employees need to know exactly what’s expected of them, and their families need to be kept up-to-date if their family member is in harm’s way.  
• Customers want to know how they will be impacted.  
• Suppliers need to be kept in the loop.  
• Regulators may need to be notified, and local government officials will want to know what’s happening in their community.  

Use multiple communication channels to convey crucial information and answer questions

• phone trees  
• text messaging  
• social media  
• Intranet site postings a reliable communication system that allows you to respond promptly, accurately, and confidently before, during, and after a hurricane or other disaster. This will help you keep your employees safe, your stakeholders informed and the crisis under control.  When you handle a crisis well, it can favorably impact your business’s reputation.

Protect Your Property

Take measures to protect your commercial property from a hurricane’s double threat of high winds and flooding.

• Start with your roof; it is the first line of defense against high winds and water from hurricanes and other storms.  
• Ensure roof elements are well maintained and secure, including  rooftop HVAC systems, vents, ducts, or other equipment.  
• If your business sits in a low-lying, flood-prone area, consider arranging for alternative storage sites at a higher elevation where stock, equipment, files, and vehicles can be stored before a storm hits.  
• Place sandbags outside doors, brace inward-opening exterior doors, and roll-down doors on the inside.   
• To protect the rest of your building, consider protective measures such as installing shutters or plywood over windows before the storm hits.
• Repair any damaged or loose building components such as siding, soffit, and fascia, roofing, and brickwork.
• No matter your location, regular inspection and maintenance of your building can also help identify vulnerabilities before a storm hits your area.
• Ensure electronics, documents, and inventory are protected from flooding hazards and safeguard your files and data in a separate, secure location or using a cloud storage platform.  

AmTrust Loss Control’s Commercial Property Protection and Maintenance page has various information on protecting your property.

Carry Adequate Insurance

After a major storm damages or destroys your business, the last thing you need is to find out you’re not covered for the recovery. Don’t make the potentially costly mistake of thinking your commercial property policy will fully cover the damage. Commercial property insurance policies generally exclude coverage for damage caused by hurricanes, earthquakes, or flooding unless they have the appropriate riders. Work closely with your insurance agent to assess your specific hurricane risks and ensure you have adequate coverage. There are several types of insurance you’ll need to consider to be fully covered for a hurricane loss, including: 

Property Coverage

You may have several different coverage types depending on your location and proximity to a coastline. All Peril is the most comprehensive, covering everything except anything expressly excluded. Named Peril will only cover what’s noted explicitly in the policy. Wind and Hail is the most restrictive policy and only covers damage caused by wind or hail.

Flood Insurance

Most commercial property policies exclude coverage for losses caused by rising water, which is the cause of much of hurricane-related damage. To be covered, you’ll need separate flood insurance. Learn more about flood insurance on the National Flood Insurance website at https://www.fema.gov/flood-insurance.

Business Interruption Coverage

Most small businesses wouldn’t be able to survive an extended shutdown without income. Business interruption coverage will help pay for ongoing expenses when a hurricane keeps your business from operating. You can often get this coverage through a businessowners’ policy (BOP), an insurance package that typically bundles property, general liability, and business interruption insurance together at a reduced rate.

Create Your Hurricane Response Plan Now

By taking the time to consider the ‘what-ifs’ of business disruption and disaster recovery,  you can identify your business’s critical shortfalls and vulnerabilities, shore up resources, and be better equipped for recovery. By having a plan, you’ll also be ensuring the safety of your employees and any customers on-site.  Because you plan will include being prepared with the right insurance coverage, you’ll have the financial security to keep your business rolling for years to come.

AmTrust Offers a Variety of Loss Control Resources

AmTrust's Loss Control Department provides a range of commercial property safety resources and risk management solutions designed to keep your business and your employees safe and prepared during a disaster. For more information about our loss control services, please contact us today.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.