Industry Insights, Investments, Leasing & Property Management, Podcast, Sellers
03/01/2026 | By Eduardo Cosme
03-01-2026
In Puerto Rico and other regions vulnerable to climate impact, the arrival of hurricane season is not just a meteorological event… it is a call to action for the business sector.
Losses due to downtime, structural damage, and lack of preparedness can be devastating, especially for small and medium-sized enterprises (SMEs).
Therefore, given the expectation of increasingly active hurricane seasons, it’s time to review your property and business space protection strategies. Beyond the walls: preparation is everything. The least visible—but most critical—component of any commercial property is its level of preparedness for real risks. This goes far beyond having sealed windows or a generator. It involves how your physical infrastructure and financial plan respond when an operational disruption occurs.1. Replacement Value, Not Book Value
Many businesses insure their properties based on market value, but the correct approach is to base it on the actual cost of rebuilding: materials, permits, labor, and time. Insuring below actual value can leave you with a significant partial loss.
2. Business Interruption Insurance: The Financial Lifeline
This policy covers lost revenue and fixed expenses (payroll, rent, loans) when you are unable to operate after an event such as a hurricane or fire. It can be the difference between continuing or closing.
3. Review Your Lease
If you operate in a leased property, make sure you know who is responsible for the insurance. Many leases do not include clauses for natural disasters, which can leave you unprotected.
4. Evaluate Your Physical Infrastructure
Conduct a technical inspection: storm drains, roof, water entry points, generator, etc. In addition to mitigating damages, this can help you reduce the cost of your insurance premium.
Companies that prepare not only avoid financial losses. They also preserve the trust of their employees, customers, and suppliers.
In a competitive market, operational continuity is a strategic advantage. How long could you be out of operation? One of the biggest unknowns when taking out insurance is the estimated downtime. Here are some practical tools to estimate it: 1. Establish your PML (Maximum Probable Loss Period) Think about the worst-case realistic scenario. How long would it take you to reopen? Consider permits, reconstruction, suppliers, and market recovery. In Puerto Rico, after Hurricane Maria, many businesses were closed for between 3 and 12 months.2. Realistic Financial Projections
Multiply your net monthly income by the estimated number of months of interruption and add your fixed expenses.
Example: If your income is $15,000 per month and you project 6 months, insure yourself for at least $90,000 plus essential expenses.
3. Choose a Good Coverage Period
Policies offer between 3 and 24 months of coverage. Choose a duration that covers from the closure until you recover your normal income level.
