Texas Winter Storms Wreak Havoc on Gym Owners

Unless you have been hiding under a rock for the past month, you are aware that Texas was hit with an expansive winter storm, covering the entire state in snow, and setting record-low temperatures. Inadequate winter infrastructure and frozen pipes resulted in not only a lack of running water, but also burst pipes and water damage. Yikes!

Due to the massive devastation, people are working to file insurance claims to cover their losses. In 2020, the average frozen pipe claim was around $15,500[1] and according to Camille Garcia, the Insurance Council of Texas’s Director of Communications, “some insurance companies are expecting the number of water damage claims in Texas due to [this storm] to exceed the total number of [nationwide] water damage claims.”[2] She expects to see “hundreds of thousands of claims arise” across home, business, and car owners as well as renters.[3]

For anyone that has suffered a water damage claim, you know it is not a good time. Water seems to be the most devastating element - it seeps everywhere, often further than we are aware, leading to rot and mold. It is a nightmare we would not wish it upon our worst enemy…but you know who you are…

What is water damage?

Water damage is typically classified as water coming down from above. Its counterpart, water rising from the ground is considered a flood.[4] Damage from busted or overflowing pipes can be considered water damage as well, regardless of if the pipes is in the floor or ceiling. However, insurance carriers often put separate limits or increased deductibles on sewer backup or sump-pump overflow types of claims.

Did you know that water damage can often be excluded from a Property policy? While no one wants to read through insurance jargon for a few hours, ensuring that water damage is included in your coverage would be well worth the time. Carriers can often exclude coverage for wind or hail as well. Depending on where you are located (we see you Florida and Texas), this could also be a big-ticket claim. These restrictions are often added to hurricane prone areas along the gulf coast or locations in tornado alley.

Without coverage for these key items, you may be hit with an uncovered claim that you will need to pay out of pocket. Not to mention the relocation costs that pile up while you have repairs made. Cost aside, other factors like where to live during this time are important. Not everyone will survive living with their crazy aunt who has 10 cats for 8 weeks![5]

As we mentioned earlier, the average frozen pipe claim in 2020 was $15,500! An unexpected cost like that could cause financial devastation to even a well-established business.

What should I look for in my policy?

This is a bit harder to answer as each policy is different, however, we would recommend keeping an eye out for the items below. They can usually be found on the Forms and Endorsements list near the beginning of your policy or Declarations Page.

1. It would be a great idea to ensure that you have Property or Inland Marine coverage on your policy. If it is not, then coverage for any physical damage to your property will not be included.
2. Anything in the policy that says Exclusion and Water or Water Damage in the same sentence.
3. Exclusions or lowered limits for sewer backup/water damage due to overflow.
4. Coverage restrictions related to wind or hail.
5. Separate deductibles for any of the above. If this is in place, it will increase the amount you have to pay out of pocket if an incident does occur. Knowing this deductible will eliminate surprises.

If you see any of the items on our list, we recommend immediately speaking with your insurance broker for clarification and to see if coverage can be adjusted on your policy. If you would prefer, we would also be happy to look at your policy and offer a coverage analysis to see if there are any gaps that should be filled.

NEXO also offers very broad property coverage to our clients that includes coverage for water damage, sewer back-up, wind, and hail. This program is exclusive to our office, custom designed for fitness facilities, and offered through one of the most well-respected carriers in the nation, Great American Insurance. Feel free to give us a call at (310) 937-2007 if you are interested in a quote.

While the events in Texas are incredibly unfortunate and devastating to witness, this is a great time for everyone to review their insurance policy and ensure that it includes everything that you want or need. At the very least, you will know what is included so that if something does happen, you will not be surprised. If there is anything that 2020 has taught us, it is that weird stuff happens!

[1] https://www.bizjournals.com/houston/news/2021/02/19/2021-winter-storm-texas-insurance-claims.html

[2] https://www.texastribune.org/2021/02/19/power-outage-bills-Texas/

[3] https://www.texastribune.org/2021/02/19/power-outage-bills-Texas/

[4] Coverage for flood damage is typically provided through a separate flood policy. Depending on the carrier, Flood coverage may be added to your existing policy for an additional premium.

[5] Unconfirmed statistics show there is a 1 in 5,000,000 chance of survival.