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Is your company adequately covered for disasters?
You might be surprised.
It’s estimated that 40% of companies have not adequately prepared themselves to operate after a disaster are forced to shut down. In addition, 25% of businesses that experience a disaster but don’t have the proper insurance shutter within two years of the incident.
Having the right insurance matters, especially when the unexpected occurs.
One of the major missed opportunities for companies is to recognize the potential expenses that insurance might not cover.
In many cases, this lesson is learned the hard way. Businesses that don’t have enough capital to cover expenses associated with a disaster may find themselves shutting their doors completely.
For example, your insurance company may completely cover any losses associated with a fire. But what about the lost income that is a result of your displacement? Will your insurance company pay for a temporary relocation for you and your workers? Will they assist with moving expenses into this temp venue? What about lost wages for employees?
Financial impacts on business because of a disaster can be devasting to your bottom line. Expenses can quickly add up and aren’t always easy to anticipate. While insurance is usually a business’s first line of defense, it could be days or weeks before you see a payment – and your business might not be able to wait that long.
Reviewing your insurance on a regular basis is critical, but it’s also important to have backup funds reserved for emergencies that can ease the financial burden while you wait for help to arrive.
In addition, you should also consider the types of disasters, such as acts of nature, that might require additional policies. Things like floods and hurricanes aren’t usually covered by standard business insurance policies. If you are at risk for specific types of disasters, you should review your insurance policies for potential gaps in financial defense.
Your insurance policies should be easily accessible if an emergency were to arise. Keep a copy in a fireproof, waterproof box. You should also have a backup copy stored in an offsite location in case your company’s building becomes damaged or inaccessible.
Review your insurance documents on an annual basis to ensure your most valuable assets are covered. Properties can increase in value, renovations may add value to your buildings, and costs can increase to repair or replace items or structures, all of which should be taken into account on your insurance policy.
You should take care to document your property and work with your insurance company to be certain you’re adequately covered. As you make new purchases for your business, your insurance policy may need to evolve to accommodate the expansions.
Taking photos of your belongings, keeping receipts on major purchases, and having a detailed inventory of your company’s assets can help you replace damaged or lost items if the need arises. It can also help you speed up your insurance claims process and may give you a boost during tax time.
Many companies learn how to prepare for disaster the hard way, but when a major incident occurs it might be too late. No one wants to be involved in a disaster, but if you’re one of the unlucky ones you’ll appreciate the time and effort you made to be prepared.
Stay tuned for our final part in our National Preparedness Month series, where we explore how to allocate resources for emergencies.
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