Business Survival after a Disaster

By: Sara Thomson

According to the Federal Emergency Management Agency (FEMA):

• 40% of businesses don’t reopen after a disaster
• Another 25% of business will fail within one year after a disaster

The Insurance Institute for Business & Home Safety as well as the Insurance Information Institute (III) have recommendations for businesses in order to help prepare ahead of time for a disaster:

• Insurance coverage should be reviewed before a disaster. Your business should have sufficient coverage for the needs of the company and the risks associated with it.
• Call your knowledgeable Hometown Insurance Agent to understand what coverage your business has, and if you need to purchase any extra coverage.
• Replacement cost coverage, actual cash value coverage, or a combination of both is provided in most commercial property policies. The replacement cost coverage will pay to repair or rebuild the property. Actual cash value coverage pays to rebuild or replace the property minus any depreciation. Consider the idea that if you only have an actual cash value policy and your business if destroyed you may not be able to completely rebuild.
• Flood insurance is not typically included in your standard insurance policies and is purchased separately, often through the federal government’s National Flood Insurance Program (NFIP). If you are in a high-risk or moderate-risk flood zone, a flood policy could help your business recover from financial loss. A common policy can cover up to $500,000 for contents and another $500,000 for your building coverage.

Other important considerations:

1. Businesses should have a business continuity plan to prepare for, survive and recover from a hurricane or other threat.
2. The plan should address the company’s risks, operations, employees, customers, contacts, suppliers/vendors, finances and information technology.
3. Each topic should have a plan in case the business is impacted by severe weather.

• Key Information should be maintained at an offsite premise, far enough away so it cannot be damaged by the same risks that may threaten your business location.
• Back up any computer data and critical business information like insurance policies, banking information, and any phone numbers for your employees, vendors, or suppliers
• If you do not already have one, create a business inventory. The business inventory should include all business equipment, supplies, merchandise, and vehicles associated with your company.

Knowing the next steps to take after a business closes due to weather will help you and your employees to continue business as usual.

We care about your business! Call your trusted Hometown Insurance Agency Broker for a review today at 1-800-568-SAVE (7283) or contact us by email at service@hometowninsurance.com  for helpful information.

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