Protect Your Business During Hurricane Season with Business Interruption Insurance
Hurricane season is well underway. Business owners in hurricane prone areas need to be sure before a disaster happens that they have adequate coverage to allow their business to recover.
There are a few steps you can take to be sure you are ready in the event that a hurricane strikes your community.
• Secure documents and electronic data. Documents and data should be backed up off site in a secure location far away from any potential storm danger. This will help you resume operations quickly and help provide any information necessary to prove a claim.
• Review your coverage. It is generally best to address these issues every year at renewal time, but with hurricane season approaching, there is still time to evaluate your needs and make adjustments
Fill the Gaps
What would happen if your business could not operate for an extended period of time because of a hurricane or other natural disaster? Business property or business owner’s policies cover the cost of physical damage to structures, equipment, inventories and material goods in the event of a loss. You need business interruption insurance to reimburse you for lost revenues when your business is unable to operate after a disaster.
Business interruption insurance is typically a rider on a property or business owner’s policy. To get business interruption coverage added to an existing business policy, you must document your current net income and the types of interruptions you want to be covered for.
You will also need to add a rider for coverage of loss of utilities. This coverage is often excluded from standard business interruption policies—particularly for loss of utilities caused by downed power lines. Many business owners on the East Coast found this out too late after Hurricane Sandy devastated their businesses.
Get the Right Amount of Coverage
To determine how much business interruption coverage you will need, determine how your business would be affected by a catastrophe like a hurricane. Include all of the costs that you would continue to incur even if your business was not operational, such as loan or lease payments, taxes, and so on. Will you need to keep workers on the payroll while you rebuild? If yes, your business interruption insurance should reimburse you for their salaries while you are not operational.
Consider Every Possibility
You should also include an “extra expenses” rider to cover unexpected costs or expenses that were not present at the time you purchased your policy, such as higher than expected building material costs after a hurricane.
Don’t forget to evaluate the potential risks to your company from suppliers and other partners who could be affected by a storm. Even if your business survives, what if one of your suppliers is wiped out? How will that affect your revenues? These risks can also be covered by business interruption insurance.
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