How to Prepare for a Small Business Disaster

Mother Nature can cause a small business disaster almost without warning. Tornadoes, snowstorms, flash flooding, hurricanes--the possibilities for a devastating small business disaster are seemingly endless. And while it's impossible to eliminate the risk of a natural disaster harming your business, you can take steps to prepare for a small business disaster by investing in business insurance.

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After a Small Business Disaster, Business Insurance is Critical

Without small business insurance, you could be left out in the cold in the event of a small business disaster. Most business insurance policies offer options to cover damage to the structure of the building as well as loss of business inventory items.

Most small business insurance policies exclude flood and earthquake damage, so additional coverage may be needed.

Create a Small Business Disaster Recovery Plan

Natural disasters can level structures in the blink of an eye. Homes, small businesses, recreational centers—no location is safe from nature's fury. In fact, 25 percent* of small businesses closed down due to disaster never reopen their doors. This is why creating a small business disaster recovery plan is absolutely essential.

Preventive measures are an excellent way to minimize financial loss in the aftermath of a small business disaster. Other than buying business insurance, developing a small business disaster recovery plan is the best way to safeguard against financial catastrophe. Here are a few steps to follow:

• Create an emergency response plan for staff
• Write a list of emergency phone numbers and addresses
• Compose a list of important business contacts, such as major clients, contractors, financial institutions, insurance agents and insurance claim representatives
• Keep duplicate records at an outside site. Major clients, important records and sensitive data should be included and updated regularly
• Set up plans to conduct business at an outside location

Taking these steps should significantly improve your small business disaster recovery efforts.

Business Interruption Insurance

Business interruption insurance, an optional endorsement included in small business insurance, reimburses you for loss your company suffers when it cannot conduct business after a covered disaster. The business is reimbursed the income it would have earned had the damage not occurred. Typical business expenses, such as natural gas and electricity costs, that you are charged even though business has been stopped are also covered.

Make certain your policy will cover your business for a significant period of time. Following a major small business disaster, it may take more than a few days to get your business operating at full capacity.

Need business insurance? Compare business insurance quotes from several leading companies with InsWeb. It’s quick, easy, and could be the best business move you make all year.

*Insurance Information Institute