Small Business Disaster Recovery Plans

July 10, 2020

No business is immune to the effects of a natural disaster once one hits. When forced to shut down because of a hurricane, tornado, wildfire, flood, or any other disaster, businesses always face the risk of permanent closure. Here are some key elements to consider when it comes to protecting your business.

All businesses should set up an emergency plan and properly train all employees about their responsibilities and how to to carry them out. Be sure to keep a physical copy of your plan available.

Organizations like the Insurance Information Institute and the Insurance Institute for Business & Home Safety have tips and tools available to help you create your plan.

Some Key Elements of A Plan

  • Use simple language and practice the procedures regularly.
  • Know how you will communicate with customers. Doing so can prevent a complete loss of business. This can include posting notices at your business, on social media, through email lists, and with local radio and newspapers.
  • Think about human resources. How will you communicate with your employees after a disaster? Could a disaster impact the ability of your employees to return to work? Will you have a method to pay your employees?
  • Identify critical business activities and the resources you will need to get those activities up and running and continue to support them.
  • Think about records you will need. Keep duplicate records and store them offsite. This could allow you to return to operation faster. This should include your insurance policy. Your policy sets out your rights and obligations related to coveage.

Review Your Insurance Coverage

Understanding your coverage is a very important part of protecting your business. Make sure you have sufficient coverage to pay for the costs of the disaster. The average policy doesn’t cover earthquake and flood damage. If these kinds of events are a potential threat to your business, you may need to purchase separate insurance. Remember to consult with your insurance carrier or insurance agent to review the deductibles and limits outlined in your policy and make adjustments as needed.

Commercial Insurance Policies to Consider

  • Building Coverage provides coverage up to the insured value of the building if it is damaged by a wind, hail, or covered cause of loss.
  • Business personal property provides coverage for business inventory that has been damaged or destroyed by wind, hail, or another covered cause of loss.
  • Tenants improvements and betterments provides coverage for fixtures, altercations, installations, or additions made to the building that the insured occupies but does not own.
  • Additional Property Coverage provides for fences, pools, or awnings at the insured location. This coverage may vary by type of additional property.
  • Business Income may provide coverage for lost revenue and normal operating expense if the place of business becomes uninhabitable after a loss.
  • Extra Expense provides coverage for the extra costs incurred, including temporary relocation or the leasing of business equipment. This helps to avoid or minimize the suspension of operations during the time that repairs are being completed.
  • Ordinance or law provides coverage to rebuild or repair the building in compliance with local building codes.

Sources:

i.i.i.

Insurance Institute for Business & Home Safety