Catastrophic events like flooding, severe storms and wildfires are becoming increasingly commonplace. Since 1980, there have been 308 weather and climate disasters in which damages were $1 billion or more, at a total cost of $2.085 trillion, according to the National Oceanic and Atmospheric Administration (NOAA). In 2021 alone, there were 18 such events.

As a result, it's never been a better time to determine if your clients—and your agency—are adequately insured and prepared for these events.

A typical homeowners policy covers many natural disasters, including hail, windstorms and lightning. It does not usually cover floods, earthquakes or tsunamis. When placing coverage, it's important to consider offering your customers catastrophic home insurance. If your client is located in an area prone to a certain type of catastrophe, such as tornados in the Midwest, earthquakes in California or hurricanes near the Gulf, look into offering a rider to the homeowners policy that provides catastrophic insurance to cover those risks.

Are your commercial clients at risk? Business catastrophe insurance is designed to protect against natural disasters and address the direct costs of a disaster, like physical damage to the premises and other business property.

For businesses, there may be a loss of income because the premises aren't usable after a disaster. Business interruption insurance covers the income that a business would have earned while extra expense coverage compensates a client for expenses incurred while keeping a business operating during rebuilding. Catastrophic events like floods could also impact businesses that host events. Event cancellation insurance covers expenses and loss of revenue associated with cancellation and postponement.

While these products are worth considering for the protection of you and your clients, how can losses be minimized? Just like boat owners have plans for hurricanes, your agency should have a plan in case disaster strikes. Train employees on disaster procedures, like where to shelter in the event of a tornado, where fire extinguishers are located and where emergency exits are located. Your plan should also involve regular practice drills. Also, do you have backup generators, flashlights or food and water if you need them?

The safety of your employees is paramount, but protection of your data is also important. Secure paper documents in areas that would not be affected by a flood. Better yet, store important papers in a safe deposit box and maintain duplicates.

A paperless system not only increases efficiency but also offers piece of mind when disaster strikes. Ensure that digitized systems are regularly backed up and properly maintained. Not only do you have an obligation to maintain client files, you also don't want to lose business. If you store your client list electronically, you can quickly communicate with clients after a catastrophic event and let them know how to contact you and when you expect to be fully operational again. You and your clients should also create a list of property and equipment with model and serial numbers and confirm that there's adequate coverage for these assets.

The more planning you do in advance, the quicker your business will be up and running again after a catastrophic event. That means making educated choices on what insurance coverage should be in place and what actions should be taken before a natural disaster occurs.

Donna Asta is a vice president and claims expert at Swiss Re Corporate Solutions and works out of the office in Chicago. Insurance products underwritten by Westport Insurance Corporation, Kansas City, Missouri, a member of Swiss Re Corporate Solutions.

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re") and/or its subsidiaries and/or management and/or shareholders.