Protecting Commercial Assets from Cyclones: A Comprehensive Guide for Hotels in Queensland
Cyclones and Windstorms pose a significant threat to the Hospitality sector, particularly those in vulnerable regions. High winds, torrential rains, and flooding can devastate property, lead to hotel closures, and create a substantial financial loss if adequate insurances and claim processes are not carefully considered. All hotels should conduct a proactive planning session with their Insurance Broker to analyse risk, and plan for action in the event of a loss. Below is a strategic approach to cyclone preparedness, combining insurance insights and risk mitigation practices.
1. Conduct a Cyclone Risk Assessment
Before a cyclone strikes, evaluate your property’s vulnerabilities:
Location Analysis: Determine if your venue’s assets are in a cyclone-prone area. Your Broker should be providing historical data and hazard maps to assess your risk level for all key weather perils, including Cyclone, Floor and Storm Surge.
Building Integrity: Inspect roofs, windows, doors, and foundations on an annual basis. Older structures may lack reinforcements needed to withstand extreme winds, hence capital expenditure plans should be considered to improve risk profile. This has a secondary benefit of highlighting to your Insurer that the Hotel is taking its risk seriously, and helps with coverage and rate negotiations.
Surrounding Hazards: Identify nearby risks (e.g., trees, signage, or unsecured furniture, plant & equipment) that could fall or become projectiles, leading to further property damage or personal injury.
Our Tip: Conducted a Risk Survey annually as part of a hotel’s proactive risk management approach. This key strategy building confidence in the Insurers to provide adequate levels of coverage and provide your Insurance Broker to market your risk to the broader insurance market.
2. Review and Optimize Insurance Coverage
Ensure your policy aligns with cyclone-specific risks:
Understand Exclusions: Many policies limit or exclude Cyclone, Flood and Storm Surge damage, or impose higher deductibles for such risks.
Adequate Limits: Verify that coverage limits reflect current rebuilding costs, including inflation and supply chain delays. Underinsurance can cripple recovery efforts. If coverage is sub-limited by your Insurers, your Broker should explain the restrictions and how the hotel can take steps to improve the venue’s risk profile to obtain better coverage.
Business Interruption Coverage: This covers lost income during downtime. It’s critical to understand the length of time it may take if a significant occurs, taking in mind that a region may go through a significant catastrophic event, in which case there may be labour and material delays/shortages.
Document Assets: Maintain detailed records (photos, videos, receipts) of property, equipment, and inventory to expedite claims.
Our Tip: Holding an annual risk review meeting outside of the renewal cycle to specifically discuss all key perils is a valuable use of time. Set a clear plan to communication and educate all key stakeholders of these risk, including the Directors of the Board, Insurers, and key suppliers that the hotel may be reliant on post a significant loss.
3. Implement Physical Mitigation Measures
Reduce risk of major damage with targeted upgrades:
Reinforce Structures: Install storm shutters, impact-resistant windows, and reinforced garage doors. Secure roofs with cyclone and windstorms straps or clips.
Elevate Critical Assets: Move electrical systems, servers, and inventory to higher floors or elevated platforms to avoid flood damage.
Secure Outdoor Equipment: Anchor heavy machinery, storage units, and signage. Trim trees and remove dead branches near buildings.
Backup Power Solutions: Invest in generators to maintain operations during power outages, especially for basement areas that rely on Sump Pumps to deal with flooding.
These measures may lower insurance premiums and demonstrate due diligence to insurers.
Our Tip: Have a detailed plan in place to deploy as many risks reduction measures in the lead up to a known weather event that is fast approaching.