Tornado Alley, Colorado, Insurance Catastrophe

Mitigating an Insurance Catastrophe

This advice for members can prepare your organization for the worst

In the insurance world, a catastrophe is an infrequent event that causes severe loss, injury, or property damage to a large population of exposures. Typically, to qualify as a catastrophe, direct insured losses to property will exceed $25 million and the event will affect many insured members. In simple terms, it’s a disaster. These disasters are usually natural (think wildfires, windstorms, tornadoes, earthquakes, floods, hurricanes). However, man-made events can meet the definition of a catastrophe. Examples of man-made catastrophes include fires, explosions, pollution, or nuclear fallout.

In Colorado, catastrophes are almost always natural, due to the severe weather the state often encounters. For instance, Colorado has the second highest number of hail claims in the United States. In 2017, the most costly hailstorm on record caused an estimated $2.3 billion in insured losses, and in 2018 hailstorms caused $618 million in insured losses. Other catastrophes of note include fires and tornadoes. In 2013, the Black Forest Fire caused $461.2 million in losses, adjusted for inflation, and in 2008 a powerful tornado hit Windsor, causing an estimated $229.6 million in losses, adjusted for inflation. These are just a few examples of Colorado’s history of catastrophic weather events.

Before a Catastrophe

The best way to mitigate the effects of a catastrophe is to be prepared. You can take several steps now to keep your district running, even after severe property damage. First, devise a business continuity plan. Like many CSD Pool members, your district may provide essential services to your constituents. If that’s the case, you’ll want to be sure you have a plan in place should your district offices or equipment suddenly become unavailable. Of course, no one can plan for every eventuality, but having a grasp on the components most essential to your day-to-day operations could benefit you enormously in the long run.

One tool that may prove useful to you as part of this process is our business income worksheet – a form that helps you determine: the total amount of income that would cease if there was no longer access to your premises; income that would cease if the premises was destroyed; continuing expenses the district would incur even though no revenue was being generated; and extra expenses the district would incur in trying to resume operations through another means. If the total amount calculated on your business income worksheet exceeds the standard $250,000 limit, it might be worth your while to purchase a higher limit. One of our underwriters can assist you with completion of the worksheet, if needed.

In addition to a business continuity plan, it’s essential to keep up-to-date property and equipment coverage schedules with the CSD Pool, and a full inventory on file in your district. This will make the claim process much easier in the event of a catastrophic loss.

After a Catastrophe

In the event of a catastrophic loss, you should take the following steps as soon as you are able to do so safely:

  1. Immediately notify Sedgwick by calling 800-318-8870 ext. 1 or emailing We are eager to help you as soon as possible in a catastrophe, but in order to get the ball rolling, we have to receive a notice of loss. To get the fastest resolution, don’t delay this crucial step; notify Sedgwick as soon as possible.
  2. Thoroughly document the loss. If it is safe to do so, take photos and/or videos of all property damage in and around the premises. Don’t be shy about the detail, either. In this situation, it’s better to err on the side of over documentation. The more immediate your documentation, the more accurate the record of damage.
  3. Protect property from further loss. If it is safe to do so, take immediate steps to stop any further property damage. Never put yourself or your staff in danger to accomplish this. For example, if your vehicles have been damaged during a severe weather event, move them to a sheltered location as soon as it is safe to do so. If you don’t have shelter available, park them in a less exposed area, or cover them with any protective materials you have on hand.
  4. Consider recommended contractors. When it’s time to begin your cleanup efforts, you may be overwhelmed at the number of options available to you, and unsure of what contractor to use. With that in mind, we have partnered with SERVPRO, a nationally recognized leader in restoration services. SERVPRO can help with water and sewage extraction, site stabilization, temporary power hookups, demolition and debris removal, structural repairs, and more. And their services are available to CSD Pool Members at a discounted rate. See our article on our relationship with SERVPRO.

What’s Covered?

The CSD Pool provides various coverage’s for direct physical damage caused by catastrophic events, unless excluded and subject to a member’s specific limits and deductibles, such as:

  • The Property form provides coverage for direct physical damage to specifically scheduled assets plus the subsequent loss of income and extra expenses.   Catastrophic perils such as flood and earthquake are covered subject to a $2,000,000 limit but can be increased if you feel this is not enough.
  • The Pollution form covers clean-up costs a member incurs as a result of a pollution incident at a scheduled location.
  • Physical loss or damage caused by a Terrorism, Sabotage and Malicious Attack event are covered.
  • The Auto Physical Damage form provides coverage for damage to specifically scheduled vehicles.

You can view Coverage Documents here.

Don’t forget to schedule a periodic review of your coverage program with your Broker or the Pool’s Member Services Coordinator to verify that your asset schedules are current and the replacement cost limits are sufficient. This step can help you in your planning process to ensure that you have sufficient coverage to help keep your district running in the event of a catastrophe.

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.