It was Saturday, Aug. 5, 2017. The high temperature for the day was 95; the evening low was 84 with an overnight low of 70—a typical summer night in Oklahoma. If there was any rain in the forecast, no one thought a thing about it. It would likely be just a shower that the morning sun would dry out and we would be baking by mid-morning. There was no threat of severe weather. In fact, there had not been an August tornado in Tulsa since 1958.1 But as Will Rogers once said, “If you don’t like the weather in Oklahoma, wait a minute and it’ll change.”
At 10:54 p.m., we received a vehicle impact board-up call. Robert Johnson was dispatched to the loss, arriving at 12:02 a.m. Robert later said that he could feel the rain and thunderstorms coming while he was on the job. He didn’t make any small talk that night, as he got the certificate of completion signed at 12:52 a.m.
It started raining as he headed back to the shop on 42nd Street in Tulsa, and the rain became unusually heavy. He pulled up to the fenced warehouse yard to wait it out. Looking in the side mirrors of his van, he saw the trees behind him folding in half and could sense he was in danger. It was 1:20 a.m.
Robert decided to make a run for the front door so he could get inside the building to safety. As he opened the door of the board-up van to get out, the hinges of the door folded it open in the wrong direction. He bolted to the front door with keys in hand, but the force of tornadic winds pushed him up against the side of the building as a tornado swept down the street. As he was slammed against the building, Robert saw sparks fly across the parking lot as a transformer was ripped from its electric pole and skidded in front of him before he briefly lost consciousness.
With the rain pounding on his face, Robert scrambled to his feet, realizing he still had the keys in his grip. He opened the front door to the warehouse and entered the building. He flipped the light switch out of habit, but no lights came on. The first thing he heard was water. Using his cell phone flashlight, Robert saw that the sound he heard was rain coming into the building through the downed ceiling tiles and grid.
With no attention to the blood dripping from his forehead, Robert dialed the number for my husband Jay, co-owner of Oklahoma Disaster Restoration (ODR), at 1:25 a.m.
“Boss, something bad happened at the shop,” he said.
“What are you talking about? What happened?” Jay asked.
“I think it was a tornado”, he said.
“How bad is it?” Jay asked.
“Real bad. It’s raining in the building.”
Robert was shaken but didn’t tell Jay about getting hurt. After ending the call, he then called his wife to let her know he was okay before heading back outside.
In the flashes of lightning, Robert could see that all the windows of the van he had been inside just minutes, before were completely shattered. The other vehicle in the parking lot was one he had recently purchased and its windows were shattered as well. The ground was littered by debris from nearby buildings.
Out of desperation to hold his wife and child, Robert knocked out the broken windshield of his vehicle and drove home, navigating around tree limbs and twisted metal that littered the street. Robert’s wife took him to the hospital where he was diagnosed with a concussion and lacerations, but released the next morning.
Jay did not waste any time. By 1:30 a.m., he was on his way to the shop to check on Robert and the warehouse. As he drove down Highway 169 near 51st Street, he saw flashes of light to his right and wondered – if rain doesn’t usually follow a tornado, why is it raining in the building? A minute later, the tornado sirens began to blare. As he turned off the highway, Jay suddenly drove into the sheets of rain. As he turned onto 68th East Avenue, the water was high as the storm drains could not keep up with the downpour. Carefully, he drove into the flooded street just far enough to reach the back driveway of the shop’s parking lot and saw our 19-foot moving truck laying on its side.
The F2 tornado formed at 1:19 a.m. and dissipated by 1:25 a.m. The six-minute Tasmanian Devil spanned 550 yards at its widest and travelled 6.9 miles, with winds of 130 mph.2 The property casualties included 129 businesses and 19 homes.3 There were no fatalities, but 30 people were injured, mostly patrons and workers from restaurants. There were 10 businesses condemned.4 Damages exceeded $50 million. The average rainfall for the entire month of August is between 2.1” to 2.9” and on this night, Mother Nature sent over 5 inches.
With no time for emotion, Jay assessed the immediate damage and called to update me on the situation. He then contacted the roofer who had installed the thermoplastic polyolefin (TPO) roof four years prior. The roofing crew was on site around 5:30 a.m.
Over the next few hours, several critical decisions were made. By 6:30 a.m., a number of key employees met with us to discuss how to handle what would happen over the next few hours as calls would begin coming in from homeowners and business owners who needed assistance.
The most pressing decision to be made was who would be in charge of the emergency cleanup and dry-out of our own business. If we used our employees, we wondered if there would be emotions tied to the decisions that needed to be made about the business we had built over the past 25 years. The size of the loss would require all our employees and more, meaning we would be unable to service our regular customers. And with the amount of devastation within just a one-mile radius of the shop, there were so many work opportunities that we couldn’t have created in years of advertising and cold calling. On the other hand, did we want to expose our vulnerabilities to our competition?
Jay and I prayed for God to provide clarity and direction. We then made the decision to call a friendly, reputable competitor we had worked with over the years.
Taking Care of Business
The first calls started coming into our answering service’s emergency dispatcher at 6:34 a.m. Several employees with servant hearts were already at the shop. Our first order of business was to remove the broken glass from the EMS board-up vehicles, stock the vans, and clear a path out of the warehouse parking lot so we could get to the main roads.
By 9 a.m., local law enforcement had begun blocking access from 42nd Street to 68th East Avenue to prevent lookers and looters, but because we had arrived at our shop before the first responders, we were able to enter ground zero in our marked vehicles. Over the next three days, our employees parked at the local home improvement store where we would pick them up in company vehicles to bring them in to work.
Within 72 hours, we received 27 job opportunities from the tornado, including board-ups, water damage, content restoration, and reconstruction. We closed on 70% of them for a total value that exceeded $1.6 million. Two-thirds were commercial jobs, an area that we had identified in that year’s business plan as an area we wanted to expand.
While there was no power in a six-mile stretch that included our office, by the end of the day we had a gas-powered generator set up to power the phones and answering hub. We were able to answer the phones during the day and forward the evening calls to a cell phone until utilities were restored in the area. Jobs were set up using a laptop computer and a dedicated hot spot.
The first order of business on Monday morning was to determine a temporary office for intaking jobs, dispatching crews, performing accounting functions, and processing payroll. Because a portion of the building was still operational for contents restoration, we wanted to stay on-site and have a place for employees to check in.
We rented a mobile command center trailer from a recently-retired DKI franchisor and had it in place before the utilities were restored at the end of that week. The local cable company ran a single, temporary line for internet. The mitigation company set up a desiccant dehumidifier and large generator to power our electronic cleaning machine and dryer, and miraculously salvaged the network server and two desktop workstations. Estimators brought personal laptops from home.
The command center was equipped with a printer, a large conference room table, white board, a mini kitchen, and a semi-private workstation. Stationed in the command center were the receptionists, accountant, operations manager, and three estimators, in addition to Jay and I.
We continued to answer the phones every day and pay both the subcontractors and employees every two weeks. We created a new normal and operated out of the command center for approximately 12 weeks.
In the warehouse, there was one 15’ x 20’ room with a working restroom and water source. We set up a temporary sink and moved the ultrasonic tank into that room – setting up the cleaning room at the same time the mitigation company was drying it. Using our own drywaller and painter, we managed to have a makeshift cleaning room ready to go within a week.
Loss to ODR
We had 13 company vehicles in the parking lot that night; eight were total losses. Windshields were cracked or broken out. Vehicles were laying on their sides. We had been decontaminating a police car inside the building and later learned that because we didn’t have a garage policy, it wasn’t covered by our insurance. The total payout for the vehicle damages was $173k and it was settled within 45 days.
The 14-foot overhead door on the south side of the building looked like a Twizzlers stick. That corner of the building was where all the drying equipment was stored when not in use. There were five dehumidifiers, 20 air movers, and three ozone machines that had to be totaled out. The remainder of the equipment was covered with debris. There were three rooftop air conditioner units tangled with TPO sitting in the front parking lot.
The front third of our roof had been peeled back like a banana, allowing the record 5” of rain to drain through the red iron frame and corrugated metal roof panels like a colander. The carpet on the second floor was so saturated it overflowed. The ceiling tiles from both floors were inundated with water and hanging from the ceiling grid.
The storm destroyed our phones, computers, desks, chairs, and the training room with over 25 years of restoration and trade magazines, IICRC class manuals, and printed 3×5 photos from every job that had brought the business from $300k in annual revenue to $4.5 million by 2016.
The storm spared most of our clients’ personal property. The boxes and hard furniture were stored in wood vaults and upholstered furniture sat on 48” pallet racks, five shelves high, covered with plastic furniture bags that protected the furniture from the tornado’s slurry of water, dirt, insulation, and gypsum. Ironically, some of the contents we held had just been cleaned from a fire the previous month, so the contents manager had also evaluated all the contents of the wood vaults and replaced the plastic furniture covers.
Once the decision was made to hire a competitor to mitigate damage to ODR, Jay and I let down our walls and were rushed with emotions. We are nostalgic and had kept memoirs from as far back as the date of incorporation in 1994. The drawings our kids made while waiting on us to finish work now looked like watercolor attempts. Cleaning out drawers and finding old treasures brought back memories from many past events. Trends and industry icons were sprinkled through thousands of magazines, publications, and sales pamphlets. 35mm prints, carefully packaged with index tabs by room and the customer’s name in bold black print, organized by year and filling more than 45 shoebox-sized storage containers were now soaked. It put a pit in my stomach.
During demolition, we filled more than five 30-yard dumpsters with contents and damaged building materials. As I stood watching them being filled, I remembered the words from one of my clients. After a fire move-back, she had told us to put all her boxes into the garage. She said she had learned to live without that stuff for the four months she was out of her house and realized it was just stuff; she didn’t need it.
The Insurance Claim
With 129 businesses affected by the F2 tornado, the governor declared a state of emergency and insurance companies sent out the CAT teams. They were quick to begin adjusting claims and issuing advanced checks. Because we were in the business of disaster restoration, there was a mutual apprehension between us.
The adjuster hired a well-respected construction claims expert, a forensic accountant, and professional salvagers to assist with the evaluation of damages. At first, I was offended, as if this adjuster did not trust me, and had to talk to myself like I was my own client. Ultimately, we agreed the use of consultants to avoid a conflict of interest would be fair and beneficial to everyone. Once the scope was agreed upon, the adjuster agreed to work with ODR’s commercial building estimator to put together the building repair estimate using a popular estimating software accepted throughout the restoration industry.
The claim process for a tornado event like this is complicated, to say the least. Understanding your insurance coverage is very important as well as knowing into which bucket each expense is classified. It is highly recommended that claimants talk with their CPA or tax preparer to set up the accounting process for receipts and expenses. This will help ensure that you do not mix insurance claim items with regular operating income and expenses.
The buckets for the ODR’s primary claim were Building, Personal Property of Others & Business Personal Property, Business Income, Extra Expense, and Coverage Extension. Each bucket is subject to recoverable and non-recoverable depreciation, along with deductibles and limits.
- ODR’s facility was 24,000 sq. ft and the Building policy was set at $1,218,943 with a 1% deductible of $12,189. The mitigation costs were $123,213 and the building repairs were $441,993.
- The Business Personal Property limit was $335,553 with a deductible of $3,355. The claim total for Business Personal Property was $170,751.
- Business Income was not pursued since we were able to continue accepting jobs.
- The Coverage Extension was used for customer contents in our custody, care, and control. A claim was denied by the Bailee Coverage policy, as there is no liability for an Act of God. The Coverage Extension was subject to non-recoverable depreciation, with the policy limits of $265,302 and deductible of $2,653. The total of damage to customers’ contents was $7,649. There was no penalty for being underinsured, but the adjuster mentioned the “Percentage Payable applying Coinsurance” could be a factor in the claim.
- Workers Compensation Insurance also came into play for Robert.
Within 10 days of the tornado, we received $175,000 to pay for emergency mitigation and temporary office set up. Within 30 days of the tornado, we had 62% of our total payout. Within 100 days, we had 86% of the total. The remainder was depreciation that was held back until the job was completed.
By Christmas, less than five months from the date of the loss, offices were finished and moved into with folding tables and chairs while we waited for backordered furniture. We also had to wait for warmer weather before completing the exterior repairs, but they were done by May. We had to substantiate that we spent 100% of the claimed funds on the building, providing receipts and cancelled checks. This took time but was completed around the one-year anniversary.
The process for determining the personal property contents was especially time consuming. We worked on the non-salvage list for over a month before we turned it over to the forensic accountant. We had several phone interviews in which she was able to classify the property claimed into the appropriate buckets. The forensic accountant and professional salvagers saved me hours of work. There were disagreements over values during the course of the conversations, but I came to the following conclusion: While I felt that I was not being given the value of one prized possession, I was given more than enough value for another piece of property. I had to set aside my feelings and look at the bottom line, which was a fair position at the end of the claim.
Within one year of the tornado, we had been made whole financially, were completely moved into a beautiful new building with brand-new office furniture, computers, and phones. Our insurance rates have increased minimally and our property value has increased by 50%. We ended the year with a huge celebration.
- Have a Business Continuity Plan (BCP)! This is an essential business document that outlines how a business will continue its critical functions during an emergency event or disruption in business. There are many free versions available.
- Know local people in your industry who do what you do and do it well. Become allies. Find someone you can trust and establish boundaries that are fair for both of you.
- Realize not all adjusters are out to get you. The hiring of professional experts can improve the quality of your claim and your mental well-being.
- Understand stuff is just stuff and having a lot of it is not a sign of wealthiness but a sign of wastefulness. The less stuff you have, the freer you are to move about. Consider earmarking one day each year to declutter your business.
- Embrace your feelings of hurt, pain, anger, and sadness. But then let go of those feelings and proceed to doing business using logic and fairness. Keep your eyes on the big picture.
- Know the value of the property you have and how much insurance to carry. Understand your policies, limits, deductibles, depreciation, coinsurance, and non-insured exposure*.
- Have a hybrid backup plan for your computer network. This should include a cloud-based backup at one location and a Backup and Disaster Recovery plan (BDR)*.
- Have some cash set aside for an Emergency Fund.5 In addition to deductibles, there are always things that come up that are not covered, along with non-recoverable depreciation. You should have a minimum of two months’ overhead available via savings or line of credit*.
5 Dave Ramsey’s 7 Baby Steps. Step 3 – Save 3-6 months of expenses for a fully funded Emergency Fund. For full training sign up for Financial Peace University. Apply the principals to your business as well as home.