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Could Your Business Weather a Natural Disaster?

Be honest: Could your business survive for several weeks—or even months—if it were shut down?

It’s not fun to imagine, but it’s a reality business owners in every part of the country face each year when a natural disaster strikes. Just last year, Hurricane Matthew left behind more than $10 billion in damage—and hundreds of businesses were among the casualties.

Beyond the damage to a building, businesses also have to absorb the hit of not being able to operate. Without money coming in, it often doesn’t take long before owners are unable to pay necessary operating expenses, including loans and taxes.

Fortunately, businesses can add business interruption coverage to their commercial policies. Business interruption compensates you for lost income resulting from a covered loss like a major fire or a tornado. It’s an important coverage that no business can afford to go without—especially when you consider that almost 40 percent of small businesses don’t reopen after a natural disaster.

A good insurance agent will suggest and help you find the right business interruption insurance. Other ways you can help plan for a natural disaster include:

  • Giving your insurance agent accurate, current expenses. To make sure you are appropriately covered, it’s important to share accurate, current expenses, including rent, utility payments, loans, taxes, etc.
  • Create a disaster recovery plan. A disaster recovery plan covers technical aspects of what’s needed to get the business up and running again.
  • Cover your suppliers. If you rely on suppliers for raw materials, inventory and more, their shut-down could have negative consequences on your business. Contingent business interruption is a type of insurance to cover your income loss if your suppliers cannot fulfill your orders after a covered loss. It basically reimburses lost profits as a result of a disruption in your supply chain. You can purchase it in addition to regular business interruption insurance.
  • Cover your utility services.  Most businesses cannot operate if there is a disruption of basic utilities, such as electric, gas or water provided by public or private utility companies.  Utility Services Failure is a type of coverage to cover your income loss resulting from a covered loss at one or more of your utility providers. You can purchase it in addition to regular business interruption insurance.

Natural disasters are an unfortunate part of life—but with the right coverage, you and your business stand a much better chance of coming out on the other side.

by Amanda Prischak