15 Minutes Won't Cut It

Hurricane Sandy is pounding the East coast and forecasters are expecting that part of the country to be without power for several days after the storm passes. This is a great time to discuss disaster preparedness. Not a sexy topic, I know. But an important topic if you own a business.

  

How would a loss of power affect your businesses financial performance? I suspect it would be difficult. During the April 2011 storms and subsequent power outage, many businesses failed, or failed shortly after. We're in the middle of one of the most severe recessions in modern history. Many businesses are in a frail financial position, losing a weeks worth of revenue just might be the straw that broke the camel's back. 

I talk about disaster planning every year about this time. Let's concentrate on physical damage this time. What would you do if the building that houses your corporate offices were destroyed? How would you rebuild your computer systems? What about your employee files? Do you even know the phone number of your insurance agent? Do you have the proper coverage? Now's the time to find out. 

This year, why not review your insurance coverage and confirm that you are properly covered in case of a physical loss. If you have 15 minutes worth of coverage on your business property, you're probably not going to be happy when it's claim time. There's a difference between business coverage and personal coverage. If you have business property, get your coverage from a business insurance provider. You're local personal insurance brand can probably provide some coverage, but it's unlikely to be what you really need.

Sit down with a business lines insurance broker and discuss your needs. Make sure to review your auto coverage for proper limits. A standard auto policy is not going to work if you're using your vehicle for business. You'll discover this when you have an accident and your business laptop is destroyed and your insurance doesn't cover the loss. Don't find this out the hard way. Discuss your business and personal risks with a commercial lines broker and get the proper limits on your personal policies and secure the proper policies for your business needs or get the additional coverage added on to your personal policies.

The point is, you don't really understand your risks if you don't have the conversation with a professional. There are several commercial line insurance brokers in town. I do business with a couple and would be happy to give you a referral if you need one.

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We don’t need no stinkin’ Emergency Plan

Being prepared is always smart, especially in an emergency.  Back in April of this year, we had bad storms pass through the state.  Tornado’s ravaged the area from Birmingham all the way to the Tennessee State line.  We’ve had storms pass through before, but not like this.  The storms spread destruction and death across the state.  And while the destruction was really bad for many people, local businesses without damage still had financial problems.

  

How did a business without any damage have financial problems?    They had problems on several fronts.  First, these businesses were without power for about a week.  That means they were out of business for a week.  I’m guessing that much of their overhead didn’t stop during that time.  Rent was still due, salaried employees still had to be paid.  Insurance and equipment leases still had to be paid, regardless of whether the doors were open for business.  So not only did they have to continue paying for much of their overhead, they also didn’t get any income from sales.  What sort of damage to your businesses financial condition would no sales for a week have?  What if you sold a product that had to be cooled or even frozen?  What if your product had to be warmed?  Now in addition to the losses from continuing overhead and no sales revenue, you have ruined inventory.

   

What is your business has some sort of emergency like a fire, explosion, flood or tornado?  What would you do with your employees and customers?  How would you keep them safe in a weather event?  What would you do in the case of a robbery?

      

Now I’m no disaster preparedness expert so I’m not about to tell you what to do with your business.  But I can give you a few points to think about.  If you don’t know how to respond to these points, a little internet research or discussion with your insurance agent/broker or workers comp insurance carrier will serve you well.  Here’s a very small list of subjects to get you thinking.  Don’t stop here, consider all the possible emergency or disaster conditions that could affect your business and create a policy or plan for your employees so they will know how to deal with these situations.  And don’t let the disaster situation be the first time they see the plan.  What does your insurance policy require for you to comply with your coverage?  Don’t wait for a disaster situation to ask the question.

   

• Disaster/Emergency/Robbery Plan or Procedures
• Employee Training on the Plan
• Emergency Contacts List
• Insurance Policy Requirements
• Business Interruption Insurance 
• Computer Program and Data Backup (Offsite)
• Important Document Copies (Offsite)