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When the Nuns fire tore through Sonoma County in 2017, staff at Audubon Canyon Ranch’s Bouverie Preserve had only moments to evacuate. The fire, which ultimately burned more than 56,000 acres, destroyed seven buildings on the 565-acre property from which the nonprofit conducts research and education. Although Bouverie Preserve was unprepared for the physical devastation of the firestorm, they were ready to rebuild and recover, in ways they didn’t even realize.
Throughout the United States, extreme weather events continue to increase in frequency and intensity. Last year, a total of 8,835 fires were recorded in California alone. These fires burned more than 2.5 million acres of land, destroying or damaging more than 3,600 structures.
This year, due to record-low rainfall, wildfire season began even earlier than usual and is predicted to last longer. Given these dire projections, it’s critical for owners of small and large businesses alike to plan ahead to ensure their companies are adequately covered in the event of wildfire-related or other damage.
Here are three essential steps entrepreneurs should take to prepare their businesses for the 2022 wildfire season:
1. Assemble your team
Although she didn’t know it at the time, Julia Clothier, COO of Audubon Canyon Ranch, had taken the first step in assembling a disaster recovery team when she retained a highly regarded insurance company to write coverage for the property. The ne plus ultra of preparedness is to have an established relationship with a team of experts whom you can call if the worst happens. While Audubon Canyon Ranch wasn’t quite there, they did know the right person to call after the firestorm destroyed the property.
The best time to consult with a trusted team of insurance advisors (including your attorney, accountant, insurance broker and a public adjuster) is before you purchase or renew your business insurance policy. A team with diverse expertise can advise you on every angle of the purchase, highlighting coverages or scenarios based on their unique area of experience. Every commercial or industrial sector has its own insurance coverage needs, and consulting with professionals about the unique needs of your business can save time, money and stress. Bouverie Preserve built its team after the fire had destroyed the property, but they were fortunate that their agent already had his own team in place. With a few calls, he put together a recovery team of lawyers, public adjusters and reconstruction specialists that turned the disaster around.
While most businesses already have relationships with attorneys, accountants and insurance brokers, public adjusters are an underutilized — and relatively unknown — resource. They specialize in negotiating and settling property insurance claims and post-disaster recovery on behalf of the policyholder. In the same way that your insurance company has its own adjuster, you can also hire a public adjuster to prepare and submit your insurance claim and to negotiate on your behalf to ensure that you recover the full amount owed under your policy. Adding a public adjuster to your team, in advance of a disaster, means you have an unbiased expert to analyze your policy and identify gaps in coverage before it’s too late.
Each expert added to your team will bring a unique perspective on what is best for your business, strengthening your preparedness plan. Having a pre-established support team will help you minimize your business interruption and get your business back on track quickly in the event of wildfire damage.
2. Check your insurance
Bouverie Preserve is now able to pursue rebuilding, largely because Audubon Canyon Ranch had purchased adequate insurance and because it assembled a highly qualified recovery team — but this is the simple story: fire, insurance claim, rebuilding. This four-word synopsis doesn’t begin to cover the complexity of their actual recovery.
It may seem obvious that the key to avoiding a financial catastrophe in the event of a loss is understanding what exactly is (and is not) covered by your insurance policy. But when was the last time you sat down and read your policy? Insurance policies are labyrinthine and not easy to parse. The devil is in the details, and even a comma can change the meaning — and therefore the coverage — in your policy.
Read your policy carefully, or consult with your agent to ensure that your policy covers the cost of replacing or repairing property damaged due to a wildfire. Is your equipment, machinery and stock covered? What is excluded? Other critical items to review include named insured and named locations: If your product is processed or stored off-site, be sure these locations are listed in your policy.
If you haven’t updated your policy since acquiring a new piece of equipment or renovating your facility, your business might not be adequately protected. Keeping your insurance up to date will ensure your property is covered in the event of a disaster. With labor and material costs higher than ever, it’s best practice to check your policy coverages at least twice a year.
In the aftermath of the Nuns Fire, it came as a surprise to Clothier and her board that — while their blanket coverage was sufficient — they learned that one building and a carport was not covered in the policy, nor was the fiber optic cable that provided enterprise-level internet access to their rural location.
Another surprise came in the form of the additional cost to rebuild to code. This coverage, known as law and ordinance coverage in your policy, provides for the higher cost to rebuild your structure to current codes. Older buildings will always need significantly higher coverages to match modern-day building and safety codes, but even newer buildings should be carefully evaluated when purchasing or renewing insurance. Demand surge price increases can further elevate the cost to rebuild, as well as reduce the availability of labor. Bouverie Preserve struggled with the 36-month limit to complete their claim when they found themselves in competition with everyone else who had lost property during the firestorm.
3. Take a video of your property
While no one had completed a full inventory of the business property at Bouverie Preserve, as luck would have it, they had extensive documentation in the form of photographs, blueprints and a facilities master plan that documented the buildings. However, reconstructing the full contents and inventory of a business is tedious, difficult work in the best of circumstances.
You can save yourself hours of time, not to mention thousands of dollars (even millions, depending on the size and scope of your business) by completing a detailed inventory before an event occurs. The easiest way to accomplish this is to record a video of every item at your business location and to frequently perform a thorough inventory to assess the true value of your business. Updating your insurance coverage based on regularly-conducted inventories is the key to full financial recovery after a disaster.
After a wildfire, it may be difficult to assess what was lost, and it’s impossible for even the most diligent business owner to remember every item. By taking regular videos of your property — and storing these videos in the cloud — you’ll be able to rest assured that the full contents of your property will be properly compensated following a disaster.
According to a survey by Marshall & Swift/Boeckh, 75% of U.S. businesses are underinsured, and the Federal Emergency Management Agency (FEMA) reports that 40% of businesses do not reopen after a disaster and another 25% fail within the following year. So, as wildfire season approaches each year, don’t get caught underinsured. The three simple steps above can make all the difference in achieving a successful business recovery.
Three years after the fire that destroyed seven of its buildings, Bouverie Preserve is now able to undertake rebuilding. They would have been able to do so sooner had they contacted a licensed public adjuster right away. Armed with hard-won knowledge, they now have their recovery team in place, regularly-updated insurance coverage and a detailed business inventory. May the recent history of this vital educational nonprofit serve as a lesson for all of us, as entrepreneurs, as we implement practices that will protect our businesses this wildfire season and beyond.