Insurance Claim Deadlines Loom for Storm-Damaged Businesses and Properties

Recent storms across the islands have left a trail of damaged properties and disrupted operations. For businesses and property owners, the critical next step is to navigate the insurance claims process. Failure to file claims within policy-defined timelines can lead to forfeiture of coverage, resulting in substantial out-of-pocket expenses for repairs and lost revenue.

The Change

Following the recent storm events that caused widespread power outages, uprooted trees, and structural damage, insurance policies necessitate prompt reporting of damages. While specific deadlines vary by insurer and policy, standard practice dictates that claims should be filed as soon as reasonably possible after an event. Many policies contain clauses requiring notification within 30 to 90 days, and some may have shorter windows for specific types of damage. Delaying a claim can be interpreted by insurers as an acceptance of risk or a lack of due diligence, potentially invalidating coverage.

Who's Affected

This situation has immediate implications for several key sectors within Hawaii's economy:

• Small Business Operators: Restaurants, retail shops, and service providers with physical locations are at risk of having damage claims denied if not filed promptly. This includes claims for structural damage, inventory loss, and business interruption due to power outages or inaccessibility. The cost of repairs without insurance could cripple operating margins. For example, a restaurant with water damage and ruined inventory could face tens of thousands in uninsured losses if a claim is rejected for late filing.
• Real Estate Owners: Property owners, landlords, and developers must file claims for damage to buildings, fences, landscaping, and other structures. Uninsured repairs can significantly impact property value and rental income. For multi-unit residential buildings or commercial properties, the cost of repairs could run into hundreds of thousands, potentially leading to extended vacancies and financial strain if not covered.
• Tourism Operators: Hotels, vacation rentals, and tour companies are particularly vulnerable to business interruption claims. Damage to facilities can lead to cancellations and reduced capacity. Promptly filing these claims is crucial for recovering lost revenue during the potential repair period and for addressing any guest displacement.
• Agriculture & Food Producers: Farmers and food producers may have claims for damaged crops, greenhouses, irrigation systems, and farm buildings. Given Hawaii's reliance on local food production, uninsured damage could lead to supply chain disruptions and increased food costs for consumers. For instance, a taro farm with flooded paddies could face significant crop loss if the damage isn't properly documented and claimed within the required timeframe.

Second-Order Effects

The ripple effects of unrecovered storm damage can extend throughout Hawaii's interconnected economy. If a significant number of businesses and property owners cannot afford necessary repairs due to denied insurance claims, it could lead to:

• Reduced Commercial Capacity: Fewer operational businesses mean less available commercial space for leases, potentially increasing rental costs for remaining businesses.
• Increased Consumer Prices: Businesses that absorb repair costs may pass them on to consumers through higher prices for goods and services, exacerbating inflation.
• Slower Tourism Recovery: Damaged infrastructure or a less appealing visitor environment can deter tourists, leading to decreased visitor arrivals and economic impact for the sector and its support services.
• Strain on Local Supply Chains: Damage to agricultural infrastructure or reduced production capacity can lead to shortages and higher prices for local food products, impacting both consumers and food service businesses.

What to Do

Immediate action is paramount to secure potential insurance coverage for storm-related damages.

• Small Business Operators: Contact your insurance agent immediately to report all damages, regardless of perceived severity. Gather all documentation, including photos, videos, and repair estimates. If you experienced business interruption, document lost revenue and extra expenses incurred. Prioritize filing claims for structural damage and inventory loss first, as these often have the most immediate financial impact.

• Real Estate Owners: Work with your property manager or directly with your insurance provider to file claims for any property damage. This includes fences, roofs, landscaping, and structural integrity. Document all damage thoroughly with date-stamped photos and videos. Begin obtaining repair quotes from reputable contractors, as these will be needed for your claim.

• Tourism Operators: Report any damage to your facilities and any anticipated business interruption to your insurer without delay. Quantify potential revenue losses by reviewing booking data and occupancy rates prior to and after the storm. Begin the process of assessing and documenting any necessary repairs or closures to guest facilities.

• Agriculture & Food Producers: Contact your agricultural insurance provider to report damage to crops, livestock, and farm structures. Document the extent of damage with photographic evidence and detailed notes on affected areas and estimated losses. If your operations rely on specific infrastructure (e.g., irrigation, power), report any damage that could impact your ability to produce or deliver goods.

Given the urgency, it is advisable to consult your insurance policy documents to understand your specific reporting requirements and deadlines. If the original policy information is not readily available, contact your insurance agent or broker immediately. Many insurers have disaster response teams that can expedite the claims process following major weather events.