It’s too late to buy insurance when the meteorologists identify a hurricane and give it a name. By that time businesses are forced to wait out the storm to see what damage it does.
A recent article by Regina Burns-Stover for Property Casualty 360, 4 Ways to Prevent Business Interruption from a Natural Disaster offers some places to start when you’re creating your business recovery plans.
Recent hurricanes, floods and earthquakes are a good reminder for businesses to review insurance policies to make sure they’re covered in the event of a natural disaster. Here are a few things to consider.
Making a projection on how long your business could be impacted without a prior experience can be really dicey. It’s tempting to select less coverage to save money especially if you haven’t lived through a hurricane, earthquake, or flood. Underestimating how much damage can be caused or how long you may be closed isn’t easy.
Almost 40 percent of small businesses don’t reopen after a disaster because they’re not properly covered. In some cases, a business may reopen just a few days later, but it could feel the effects of the event long after it’s back up and running. Business owners, review your policy limits now to make sure they’re adequate. Make sure your coverage includes extra expense as well. It’s best to be as prepared as possible.
You might not be directly affected by a hurricane or earthquake, but your suppliers might be. If you can't get raw materials to make your products, or if you can't deliver them, you might need contingent business interruption (CBI) to cover your suppliers. We can assist you in reviewing your policy to assess what weather events trigger all of your business interruption coverages and the limits provided.
If a business has been impacted by a storm, operations might be stalled for several weeks or months. If you have skilled professionals, you probably want to ensure that they can continue working when the business is back up and running. You may want to be sure your employees are being paid while the business is being rebuilt.
It’s important for a business to determine which classes of employees should be covered during a period of restoration and any exceptions to employees are addressed and defined appropriately covered as “ordinary payroll” under business interruption coverage as well.
In addition to making sure that a business has adequate insurance to cover necessary repairs and rebuilding following a weather event, it’s vital to have a disaster plan that covers technical aspects of what’s needed to get the business up and running again. Similarly, you need a communication plan that outlines how to alert employees about the status of the business.If a business makes organizational changes, they may want to revisit who is and is not covered under payroll insurance. Putting these policies into place now, and learning from the mistakes of others, can help you deal with a disaster if — and when — it strikes.
For additional information on creating a plan, see our blog Dust Off that Disaster Recovery Plan.
We would like to suggest that you include reviewing your Disaster Recovery Plan as a part of your January starting the new year activities. Naturally, we are available and willing to help you revise your plans and make decisions about your coverage.
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