How Long is Your Period of Restoration?
So, the worst has happened. Your business has had a devastating fire. You carry insurance coverage for the building, so fortunately there will be money to rebuild. However, that could take many months, and you clearly remember filling out forms to determine your loss of business income so that insurance could be procured for that as well. If the
insurance will help you pay your utility bills, etc. after the loss, you should be able to reopen at some point.
The realities of rebuilding after a loss bring to light a very important consideration. How long will it take? On your insurance policy this is called the Period of Restoration (POR), and calculating this can be tricky at best. One of the reasons it is so difficult is because there are so many unpredictable factors.
Here are a just a few factors in the rebuilding process:
- The initial building fire claim must be adjusted and the settlement agreed upon before any rebuilding can occur. Depending on the building size and amount of the loss, this could take from 30-90 days.
- New building plans need to be drawn up.
- A new contractor has to be found and hired.
- Any applicable building permits must be obtained. Any builder will tell you that this process can present many snafus.
- The building site must be prepared. This may mean demolishing what is left of the old structure, removal of all debris, and possibly even dealing with EPA guidelines, depending on the toxicity of what was in the building.
- The structure must be rebuilt.
- The structure must be restocked.
- Employees must be found and hired, or rehired.
- If a manufacturing facility, machines and equipment must be found and installed.
- There may be additional problems if the federal or state building codes have changed. If your building is over 5 years old, your policy should contain language that will allow extra time for this particular problem (called Ordinance and Law-Increase Period of Restoration).
As you can see, the number of considerations when deciding on insurance coverage can be extensive. A thorough discussion of these factors with your insurance agent should be part of any business owners insurance review. If you have any questions, reach to me by calling 877-352-2121, or emailing me at srichardson@clark-mortenson.com.
