Don't let a natural disaster derail your business

Protect what you built with the right policy and a contingency plan.

From tornados and floods to hurricanes and earthquakes, natural disasters happen. You can’t stop them, but you can be prepared to protect your business.

There’s a chance your business could face costly damages or even struggle to reopen without the right policy and contingency plan in place. So, what’s an owner to do?

There’s a policy for that

Start with property hazard or general liability insurance for your business. General liability combines coverage for damaged property and for people, should someone on the premises suffer bodily injury. These policies may need supplemental policies or riders to help you recover after a disruption though. They don’t cover the following:

• Ongoing payroll payments to salaried employees
• Lease or mortgage and utility payments at your business location
• Relocation expenses, rent and utilities for a temporary building
• Cost of products and materials to replace your current inventory (vendors may charge higher prices and delivery surcharges to get them to you quickly)
• Expense of recreating or reassembling business, financial and legal records that were lost

Then there’s business interruption, catastrophe or business income insurance, which protects you from profit losses and is available for two scenarios: loss of income because business operations are interrupted, and the reimbursement of expenses you incur to keep your business operating (including employee salaries).

A business owner policy (BOP) can be customized to combine several different insurance policies under one umbrella. You can generally receive a lower single premium and easier administration with a BOP, which may include property insurance, business interruption insurance, vehicle coverage and professional liability.

Make it a priority to plan

In the event of a natural disaster, you’ll want your insurance agent’s phone number and email address at the ready. You’ll also need access to all your business files, insurance policies, banking information, and employee and vendor contact information. Keep this critical information offsite or on the cloud so you can access it far away from your business.

Having a contingency plan is vital for your business to survive and recover from any type of natural disaster. To get started, consider using free resources available at disastersafety.org. Then share the plan with employees, assign responsibilities and offer training so everyone knows what to do. It’s important to review and adjust your plan regularly.

With some forward thinking and a little preparation, you can protect what you’ve worked so hard to build.

Next steps:

• Talk to your insurance agent to make sure you have sufficient coverage.
• Create a continuity plan and review it with your employees.
• Choose a remote site at which to store critical information/data, files and product/inventory.
• Talk with your advisor about setting up a contingency fund for immediate access to funds after an unforeseen event.