Disaster-Proof Your Business with Business Insurance

Even the largest, most profitable businesses can be hamstringed by a major disaster. And if a damaged business can't operate, it loses money. That's where business insurance comes in. It covers damage caused by most natural disasters. But as the old adage says, an ounce of prevention is worth a pound of cure, and preventing damage before it happens saves time and money.

By disaster-proofing your business, you can minimize any potential damage and keep your business, well, in business. Here's how to do it.

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Step One – Know the Exclusions

Standard business insurance policies offer a wide range of coverage, but they don’t cover damage caused by certain perils. Here are a few major exclusions:

  • Floods – a standard business insurance policy will not cover flood damage. If a flood strikes, your business insurance policy will not cover the losses. You must purchase a separate flood insurance policy to secure coverage.

  • Earthquakes – business insurance does not provide coverage for earthquake damage. You will need a separate earthquake insurance policy or commercial property earthquake endorsement.

  • Terrorism – if a business is damaged as a result of a terrorist attack, a standard business insurance policy will not reimburse the losses.

If you fail to review these elective coverage options, you may be left out in the cold if your business is damaged or destroyed by one of these disasters.

Step Two – Minimize Risk in Advance

Following these preventive safety measures can help minimize damage in the event of a disaster:

  • Put an evacuation plan on paper, and communicate any changes to employees.

  • Have a professional inspect your building’s electrical system. Faulty wiring is the cause of many nonresidential fires. Situating your business in a fire-resistant building can help protect against fire damage.

  • To minimize potential structural damage, make certain your building conforms to damage-resistant building codes.

  • Keep business records updated, including all business transactions, payroll information, and other pertinent records. Businesses should keep both computerized and written records.

  • Identify critical business activities and resources your business needs to maintain functionality during a crisis, and develop a specific strategy to transfer/access those resources to an alternate site.

Step Three – Create a Disaster Recovery Plan

When disaster strikes, the businesses that survive and recover quickly are those that plan in advance. This involves developing a complete and well-rounded insurance plan as well as preparing a proper disaster recovery plan:

  • Plan for the worst possible scenario. Before disaster strikes, prepare a list of alternative facilities and qualified contractors to repair or rebuild your facility.

  • Keep a list of important contact information for the following: local and state emergency services, primary clients, financial institutions, realtors, contractors, insurance agents, employees and company officials.

  • If your business is forced to relocate for any period of time, develop a strategy to notify customers of your new location, such as posting a notice outside the original premises or notifying clients directly.

Remember to review your disaster plan on a regular basis. If any changes are made, make certain to communicate them to employees. If you’re in need of a business insurance policy, InsWeb.com provides free, no-obligation business insurance quotes in minutes.