Consider creating a disaster plan which contains emergency contact information, employee duties, and resources for your business to access following a disaster. There are a variety of federal resources available for emergency and contingency planning:

• Ready: Ready.gov is a national public service campaign designed to educate and empower the American people to prepare for, respond to and mitigate emergencies, including natural and man-made disasters. The goal of the campaign is to promote preparedness through public involvement.
  • Planning Preparedness for your business

• IRS: Preparing for a Disaster (Taxpayers and Businesses). The Internal Revenue Service encourages taxpayers to safeguard their records. Some simple steps can help taxpayers and businesses protect financial and tax records in case of disasters.

• OSHA : The General Business Preparedness for General, Construction and Maritime Industries website provides a listing of all of the specific hazards for which the agency  has information available on its website. This site also contains links to general emergency preparedness and response guidance.

• CDC: Natural Disasters and Severe Weather. Website provides resources related to specific weather events and health impacts.

• FEMA: Climate Risk and Resilience Tool. The Resilience Analysis and Planning Tool gives everyone access to powerful data and GIS mapping that can help everyone understand their community.

• Being Weather Ready: National Weather Service Wireless Emergency Alerts

• NOAA WEATHER RADIO is a nationwide network of radio stations that broadcast continuous weather information from the nearest National Weather Service office based on your physical location.

Commercial property insurance is an essential and comprehensive policy, but there are three major types of natural disasters that it may not cover: floods, hurricanes and earthquakes.

• Flood – Most commercial property insurance does not cover damage done by flood. Commercial flood insurance, regulated by the federal government, can cover the costs that are incurred if a business is damaged by floodwater. In addition to protecting the building, it also offers protection to assets located inside of it, including furniture, fixtures, equipment and other business properties.

• Hurricanes – Any businesses that are situated on a coastline in a hurricane-prone area need to be aware of the limitations of commercial property. A standard business policy will cover loss from wind damage and rainwater that gets inside a building. It does not cover water due to flood on the ground level.

• Earthquakes – Businesses that operate in earthquake-prone areas need to obtain a dedicated earthquake insurance policy or a commercial property earthquake endorsement. Earthquake damage has been reported in every state in the U.S. despite proximity to fault lines.

Business Interruption Insurance

This option could cover costs for a business that is incapable of operating due to longevity of recovery from a natural disaster. This type of policy pays out only if the cause of the business income loss is covered in the underlying property/casualty policy.

• Insurance will replace income lost if business is halted due to direct physical loss or damage, such as might be caused by a fire or a natural disaster.
• This type of insurance also covers operating expenses, a move to a temporary location, payroll, taxes, and loan payments.
• Business interruption insurance could apply if a civil authority shuts down a business due to physical damage to a nearby business.
  • If a state, local, or federal government entity prohibits access to the business premises, and thereby forces businesses to temporarily close, this may cover lost income through a civil authority clause.

**Ensure you have access to all policy information including carrier name, policy number, and reporting information outside of a physical location. In the event of a disaster, access to these materials may be impacted. Remember your local agent may also be affected and inaccessible.

A natural disaster might have significant impacts on your project. The below are some items to consider when agreeing to a contract.

1. Does your contract deal with the event of disaster or other unforeseen event that will materially impact the subject of the contract?
2. Does your contract include a “force majeure” clause?
   • Force majeure provisions in construction contracts are written to make sure that the parties are protected from interruption of the work by events that are outside of their control.
   • The force majeure clause must specifically cover the circumstances that warrant its application. The more specific the definition, the better, mentioning the word storm may not be sufficient.
   • The circumstances that permit the force majeure clause to be invoked must substantially impact or prevent a party’s ability to complete their contractual obligation.
   • The circumstances that gave rise to invoking the force majeure clause must directly be the cause of the inability for a party to perform their contractual obligations.
3. Does the contract specify actions that the owner and contractor will take in the event of a force majeure or other interruption?
4. Does the contract indicate consequences to the performance of the contract? Your contract should describe the consequences of a contractor’s failure to perform while a force majeure event is occurring. Other provisions to be considered: compensation, time extensions, deadlines, and reasonable considerations for additional contract frustrations.
5.  Additional considerations and notices of delay: a party’s rights and responsibility under the contract may need to be considered as it relates to secondary consequences of an emergency/force majeure. They may include change orders, labor, or material supply chain disruptions, insurance issues, suspension, termination, and notice provisions.
6. Make sure the contract addresses payment procedures, payment sources, and premium time labor rates.
7. Be sure you know who owns the property you are working on and where legal notices are to be sent.
8. Make sure you maintain proper licenses and obtain all permits required by the agencies having jurisdiction.

Our ASA Attorneys’ Council is a national network of dedicated construction law attorneys active and engaged on our issues as an Association. If you would like a listing of Council attorneys in your area, please contact Shannon Oscar at soscar@asa-hq.com. 

In order for the Federal Government to respond to a disaster with financial resources, States and Tribal Governments need to petition the President for an emergency or major disaster declaration. Both declaration types authorize the President to provide supplemental federal disaster assistance.  Not all programs, however, are activated for every disaster.  The determination of which programs are authorized is based on the types of assistance specified in the Governor or Tribal Chief Executive’s request and the needs identified during the joint Preliminary Damage Assessment. The below sites will assist in understanding what resources might be available to you following a declared emergency or disaster in your area:

For more on the declaration process see FEMA’s How a Disaster Gets Declared Site.

Check this site to see if a disaster has been declared in your area. Links to current disasters and resources: Disaster Assistance Improvement Program

The Federal Emergency Management Agency (FEMA) coordinates the federal government’s role in disaster preparation and relief.  If an emergency declaration is made by the President, FEMA can offer federal grants for temporary housing, emergency home repairs, loss of personal property and the like.

• Individual Assistance after a Disaster: Assistance to individuals and households may include: Individuals and Households Program; Crisis Counseling Program, Disaster Case Management, Disaster Unemployment Assistance, Disaster Legal Services, Disaster Supplemental Nutrition Assistance Program.
• Public Assistance: Assistance to State, Tribal, and local governments and certain private nonprofit organizations for emergency work and the repair or replacement of disaster-damaged facilities, which may include the following categories: debris removal, emergency protective measures, roads and bridges, water control facilities, buildings and equipment, utilities, parks, recreational and other facilities.
• Hazard Mitigation Assistance  – Assistance to State, Tribal, and local governments and certain private nonprofit organizations for actions taken to prevent or reduce long term risk to life and property from natural hazards.
• FEMA Regional Office Contacts– Includes national hotlines and regional office contact information.

Small Business Administration (SBA) provides low-interest disaster loans to businesses and homeowners to help them recover from declared disasters, civil unrest, and natural disasters such as hurricanes, flooding, and wildfire.

SBA Loans and Disaster Assistance

• Physical damage loans cover repairs and replacement of physical assets damaged in a declared disaster.
• Mitigation assistance provides funding to cover small business operating expenses following a disaster.
• Economic Injury Disaster Loans provide economic relief to small businesses and non-profits that have suffered damage to their home and personal property.
• Disaster Recovery Center– Apply in person and receive personal, one-on-one help from an SBA representative. For more information or to find a location near you, visit SBA’s website at sba.gov/disaster or call SBA at (800) 659-2955.

Additional resources

• • Small Business Development Centers (SBDC):  The SBDC network is the largest SBA-funded Resource Partner and provides one-on-one business advising at no cost to entrepreneurs. SBDC-certified advisers can assist you with difficult issues post disaster. Find your nearest SBDC.
  • Small Business Administration Community Navigators Program: SBA recently launched the Community Navigators program, a partnership with local community organizations, to help millions of minority-owned and disadvantaged small businesses stay afloat during a time of disaster or other hardship. Historically, these groups have had less access to existing SBA resources and this program aims to close that gap. To learn more or find a local community navigator, check here.
  • SCORE: Organization offers  Small Business Resilience Training that can help you develop the tools needed to  adapt, reopen, and grow successfully through any disaster.
  • Fraud: Protect yourself and your business following a disaster. FEMA offers resource pages dedicated to Scams and Disaster recovery rumors.
  • Register for Federal contract work:  Federal Disaster Response Registry – When national emergencies or disasters such as floods and hurricanes occur, supplies and services need to be procured and rushed to the affected area quickly. To expedite this process, the System for Award Management (SAM) contains a Disaster Response Registry listing those contractors who are willing to provide debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief supplies and/or services.

Call your insurance and adjusters.

• Identify the policies that may be in effect following the event.
• How long do you have before you file the claim?
• Send required notices. Request copy of owner and subcontractor’s notices.
• In the aftermath of a natural disaster, local resources are likely to be insufficient for the immediate response.  It is common for contractors to come in from out of state, but not all contractors are reputable or capable of working well with the insurance process.  Whenever possible, seek guidance from your agent and/or carrier, and try to work with properly-vetted companies.
• Think carefully before contracting with a public adjuster. Public adjuster contracts will typically “limit” your rights with regard to managing carrier payments and may not serve your interests. Seek counsel from your agent and/or carrier to ensure that you are working with reputable service providers.

Document Loss

• Generate specific lists that reflect purchase price and date and any other relevant information. Photos of damaged items a plus. There are apps that can help with documentation including this resource by NAIC: Home Inventory (naic.org)
• Video walk through of damaged area.
• Consider delaying some immediate repairs until insurance has reviewed losses.

 File Claim

• Confirm how long the company has before they offer a claim settlement.

 Possible Surprises

• Know the difference between “actual cash value” and “replacement cost value.” Actual cash value means depreciation is factored into analysis. replacement cost value is cost of replacement with an identical piece of property.
• Know that your coverage on business income loss could be impacted by determinants on “period restoration” date and direct physical loss or damage vs. depressed business conditions.
• Watch out for deductibles and co-insurance clauses that may directly impact your claim settlement.
• Review issues from previous natural disaster insurance claims.
  • Insurers slashed Hurricane Ian payouts far below damage estimates, documents and insiders reveal

Following a natural disaster legal counsel may be engaged to assist with issues related to:

• Environmental issues that may stem from the damage site including ground contaminants and relevant regulatory issues.
• Any and all contractual issues related to delays, additional costs, compensation issues.
• Issues engaging insurance company and coverage claims.

Our ASA Attorneys’ Council is a national network of dedicated construction law attorneys active and engaged on our issues as an Association. If you would like a listing of Council attorneys in your area, please contact Shannon Oscar at soscar@asa-hq.com. 

Potential Resources List:

• Disaster Legal Services
• American Bar Association
• Legal Aid Disaster Relief Center