You have set up your cannabis business and it is picking up phenomenally with a steady flow of customers lining up for your products. Suddenly, you have to deal with this wave of destruction.
No one anticipates destruction or damage to their property and you might experience a whole range of emotions from shock and denial to sadness, uncertainty and a sense of helplessness and loss of control.
How do you proceed when faced with property damage?
This simple review will take you through the path to recovery after you experience property damage and the process of preparing claims for the incident.
What do you do first?
Damage to your property could occur through negligence, willful destruction or natural disasters. Incidences of negligence could lead to occurrences such as fire while willful destruction occurs in cases such as vandalism, theft or even arson. Natural disasters also known as acts of nature could be earthquakes, floods, storms and more.
If you find that your cannabis business has fallen prey to property damage, it is imperative that first you take a moment to acknowledge the feelings of loss so that you can begin the process of healing. This calamity is bound to affect not only yourself but also your employees’, customers, business partners and the growth trajectory of the business itself.
Once you have come to terms with the situation, it is now time to pick up the pieces and spring into action.
Step 1: Account for all your employees
You need to ensure you have a good idea of where all your employees are and that they are safe. If anyone has been injured in the incident, get in touch with the police and first responders both to assist and to help you lodge reports that will come in handy later.
Ensure to get a doctor’s report and a police report where applicable.
Step 2: Secure your business location from further damage
Once you have ensured that all your employees are accounted for and out of harm’s way, take steps to ensure that your business location does not experience further damage.
Here are some steps you can take to ensure you both have enough evidence for your reports and claim but also secure what’s left:
- Take photos and videos of the damaged property right after the incident and back up any security footage available.
- Cover property in case it is exposed to the elements or is out in the open to avoid further damage to it.
- After taking photos, move undamaged inventory to another facility where possible in case it is impossible to properly secure it on the current premises.
- Make temporary repairs, clean up, board up and keep sentry if necessary and possible.
- Separate damaged from undamaged inventory. Keep damaged inventory as it might come in handy during claims.
- Document debris such as window glass and safely dispose of it.
- Double check security cameras and other security features for usability. Continue to use them.
Step 3: Make initial Contacts and Reports
The next step is to notify your insurer of the damages your business has sustained. Your insurer should give you an indication of the paperwork you might need such as police reports.
Documentation is vital in the process of making reports, so ensure to attach clear photos and videos which properly document the extent of the damage. Ensure this evidence is backed up.
While making the report, you should be able to clearly list all the damaged items and the undamaged ones in a very detailed summary. Having an inventory of what was in your premises to begin with would be of great help. Such a summary should be maintained and stored offsite.
Step 4: Putting the Claim Together
A very important step is to create your own individual “claim file,” as a notebook, spreadsheet, or on other bookkeeping or accounting software. What will you log in this claim file? Absolutely everything you can. The more detailed evidence you have, the faster the claim process will be.
In case you incurred expenses in the process of cleaning up and securing your property, note the costs including specific hours and wages incurred for this activity. If you carried out any restoration work or repairs, you need to keep all the receipts, and evidence of other costs such as wages as well.
If you need to submit a business interruption costs claim (lost income due to delayed, refused or cancelled orders and additional expenses) in case you have a Business Owner’s Policy (BOP), you should ensure to provide the most current financial statements which should be as comprehensive as possible. Your accountant, auditor or other financial professionals should help you with that.
What Happens Next?
Lodging the claim is just the first part. The insurer might fully or partially accept the claim depending on the evidence provided and policies taken out. Expect a call from the adjuster within a few working days of you making the call to request you to furnish them with additional details and evidence. Part of the requirements they may ask you for are:
- The photos, videos and other documentation you compiled
- Details on your lease if you are a tenant
- Information concerning any third parties that may have been on premise or somewhere near at the time of the incidence
- Notations on actions by authorities (for example if you were requested to close or leave the premises)
- Whether your business will be able to resume its smooth operations after the incidence
The adjuster will then consult your insurance policy with that information in hand in order to determine what coverages are applicable and their limits and sub-limits as well as any deductibles which may apply.
After this, you will receive written communication which will confirm the scope the policy will cover as well as terms that may limit or exclude you from coverage.
In cases where the damage will significantly affect your continuing operations, your broker may negotiate for expedition of your claim or partial settlement to get you back on your feet faster. This however is not guaranteed and is subject to the fine print of your policy.
Be prepared to be asked to provide additional information throughout the claim process.
Recovery in the wake of property damage be it significant or mild can be quite taxing. Allow for some time, especially if business interruption calculations have to be made. Of importance is clear, consistent communication between you and your adjuster throughout the process.
Ensure to be always prepared for potential loss well before you experience it. Search your policy for key words or get in touch with one of our experts for assistance in ensuring you have proper coverage.