Hunton Retail Law Resource

Coastal areas in Texas have already begun evacuating as Hurricane Harvey heads for the Gulf Coast. Weather experts anticipate that the windstorm will reach Category 3 or Category 4 status by the time it makes landfall on the Texas coast late Friday night or early Saturday morning, making it the first Category 3+ storm to make landfall in the United States since Hurricane Wilma hit South Florida in October 2005.

As the winds diminish and floodwaters recede, significant damage to property and resulting interruptions to businesses are expected. Loss can be expected in areas affected directly and indirectly by the storm. And, the devastation is expected to be extraordinary. For example, the last time a hurricane of this expected magnitude hit the United States, the National Hurricane Center estimated that property damage alone exceeded $20 billion. Structural damage will run the gamut, from water damage caused by storm surge, floodwaters and/or wind-driven rain; broken windows and damaged and missing roofs caused by wind and/or blowing or falling debris; and in many instances, total destruction of property caused by storm surge, floodwaters and/or the storm’s 111+ MPH winds. These physical losses will, in turn, result in business interruptions and, consequently, lost earnings. Damage and destruction to property will, in many cases, lead to losses in business revenue and event cancellations. Damage to supply chains, vendors, customers and markets may lead to production slowdowns and delays. And damage to physical property may lead to increased building costs due to continually evolving building codes. With damage and lost income estimates running into the billions, policyholders should review their insurance policies to determine whether or not their losses will be covered.

Read our full alert.