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In The Event Of Wildfires, Businesses Need To Understand Their Insurance Policies

With wildfires consuming areas in Northern and Southern California last year, residents and commercial real estate owners need to take a hard look at their policies, according to The Association of California Insurance Companies Public Affairs Senior Director Nicole Ganley.

The charred mountainside from the Skirball fire.

In October, wind-driven fires in northern parts of the state burned more than 200,000 acres and destroyed or damaged 8,000 homes and commercial structures resulting in $9B in insurance claims, according to Insurance Commissioner Dave Jones. Forty-four people died.

In December, a series of fires in Southern California ravaged more than 300,000 acres, destroying or damaging more than 1,000 homes. The total lost and claims are yet to be determined. 

Bisnow spoke to Ganley about how commercial property owners could better protect their businesses in this wildfire-prone state. 

2017's Thomas Fire in Ventura County

Bisnow: Generally speaking, what should commercial real estate owners understand about the importance of having insurance?

Ganley: Just like a family, businesses need a plan for catastrophes, earthquake, wildfire and storms. It’s not just for their employees but to protect the property. The most important thing is to have a conversation with your insurance broker and understand your policy.

Bisnow: What is the first thing business owners should do to protect their business? 

Ganley: Aside from having insurance you need to make an inventory. What kind of equipment do you have? After an insurance claim, you need to show the adjuster what was lost. Document what you have in your business so you know what needs to be replaced.

Have a conversation with your agent and really understand your policy. Some businesses are manuscript. Some have business interruption coverage. Every business has unique needs.

Bisnow: Explain the process of what insurance agents go through when they visit a site that is damaged or destroyed by a fire.

Ganley: Each insurance company does it differently. Sometimes it is an insurance adjuster or agent. They are going to go in, survey the damage and take pictures. They take a look at what was damaged and make a detailed scope of work. 

Bisnow: There have been reports that some insurance companies are hesitant or denying homeowners who live in these wildfire-prone areas with insurance coverage. Are some insurance companies doing the same thing with commercial property owners?

Ganley: Insurance companies have to balance their book to stay in business. They have to stay solvent to pay claims. In these high-risk areas, some are pulling back on their writings. Some are putting risk and writing more. It all depends.