Courtesy of iii.org
With predictions of an above-average hurricane season issued by Colorado State University this week, companies must take steps to prepare and increase their chances of survival, according to the Insurance Information Institute (III
Forty percent of businesses do not reopen after a disaster and another 25 percent fail within a year, according to the Federal Emergency Management Agency (FEMA), but by taking action now to prepare, companies can increase their chances of getting back on their feet financially
III and the Insurance Institute for Business & Home Safety (IBHS) recommend the following steps:
Developing a Business Continuity Plan
Having a business continuity plan is crucial for companies to prepare for, survive and recover from a hurricane Use IBHS's free OFB-EZ® (Open for Business) Corporate Account Planning Tool Inuit to create a plan that focuses on recovery after the first emergency. Share your plan with employees, assign responsibilities and offer training so that your staff can work together to restore your business. Perform regular exercises to assess and improve the response.
Maintain Important Information Off-Site
To get your business up and running as quickly as possible after a disaster, you need to have access to critical business information. In addition to backing up computer data, keep other important information out of the website, such as your insurance policies, bank details and telephone numbers for employees, key customers, suppliers and suppliers, your insurance staff and others. If you have a backup site, make sure it is far enough away so as not to be affected by the same risks that threaten the primary site. Use IBHS's free EZ-PREPTM emergency preparedness and contingency planning tool with customizable checklists for your business to make sure you have a well-organized plan and are ready to respond when disasters occur.
Create a Business Inventory
Include all business equipment, supplies and goods ̵
Review your insurance coverage
It's time to review your insurance before disaster occurs and you must file a claim. It is important that your company has both the right amount and type of insurance for its needs and risk profile. There are two types of policies that you can purchase as a business owner:
A business owner policy (BOP) is often used by small businesses. BOP policies combine property coverage and liability in an insurance policy and are usually less comprehensive than a commercial policy.
A commercial multi-peril (CMP) policy combines multiple coverages – such as commercial property, liability, inland navy and commercial vehicle – into a single policy. It is usually cheaper to buy a CMP policy than to buy the cover individually.
Choose Compensation Cost Coverage
Most commercial property policies provide either compensation cost coverage, actual cash value coverage, or a combination of both. Reimbursement cost coverage will pay for rebuilding or repairing properties, based on current construction costs. Actual cash value coverage will pay to rebuild or replace the property minus depreciation. Depreciation is a decrease in value due to wear and tear or age. If your business is destroyed and you only cover actual cash value, you may not be able to rebuild completely.
Think about tenant coverage
If you rent or rent a building, consider tenant coverage, which will insure your local property, including machinery, furniture and merchandise. The building's ownership policy does not cover your content.
Do not forget flood insurance
Flooding is not covered by standard commercial insurance, so consider buying a separate flood policy. If you are in a flood zone with high to moderate risk, you can protect your business from devastating financial loss. Commercial flood coverage is available from the National Flood Insurance Program (NFIP) and provides up to $ 500,000 in building coverage and $ 500,000 for content. You can also get coverage through private insurance companies.
Visit the Business Insurance Section of the I.I.I. website for more information.
Facts and Statistics: Disasters
Articles: When Disaster Strikes: Preparation, Response and Recovery; Does my company need flood insurance?
Colorado State University
Insurance Institute for Business & Home Safety
National Flood Insurance Program
National Hurricane Center
Seasonal Hurricane Predictions
Small Business Administration