Business Interruption Policies Help Companies Weather Disasters
WASHINGTON D.C. — Helping businesses re-establish normal operations after Hurricane Dorian will be one of the most important ways insurers support communities along the East Coast in getting back on their feet.
While most businesses have insurance to cover their buildings and equipment, many companies hit by a disaster may not survive because they have to shut down and, as a result, have no income for days, weeks or even months. The businesses most likely to weather a storm are the ones that have business interruption insurance.
According to the American Property Casualty Insurance Association, business interruption policies vary but can help cover extra expenses needed to conduct business in a new location, such as higher rent, equipment costs or site alterations, or to replace lost income if forced to close due to the storm.
The steps businesses take before a storm and immediately after damage can make all the difference. The Federal Emergency Management Agency estimates 25 percent of small businesses do not reopen after a disaster.
APCIA recommends several steps for businesses damaged by a natural disaster:
SAFETY FIRST: Check for safety hazards, such as downed trees, branches, downed power wires, and leaking gas. If you discover gas leaks or live wires, notify your utility provider immediately.
SECURE PROPERTY: Cover all openings that may have occurred, such as broken windows or a damaged roof, and secure the property from further damage or theft. Keep all receipts for anything purchased for that purpose so they can be submitted to your insurance company. Do not attempt to make permanent repairs on your business until an adjuster has inspected it.
DOCUMENT DAMAGE: Assess the damage and report all damage to your insurance company or agent as soon as possible. Take pictures of your building and contents to document any losses or damage. Be prepared to list the “replacement cost” of each item and its actual cash value. A claims representative can help their policyholders to determine the business' damage and if business interruption coverage will apply.
MAKE A GAME PLAN: Develop a list of steps that will be necessary to get the business operating either partially or fully.
KEEP DETAILED RECORDS: Keep detailed records of business activity and extra expenses during the interruption period and prepare records to show the income from the business both before and after the loss.
CAUTION WITH CONTRACTORS: As you seek contractors to make repairs, deal only with reliable professionals. Ask for and verify references and contact local police, chambers of commerce or Better Business Bureaus for complaint information involving a contractor. Your insurer may also have referral options for contractors. Get written bids from the contractor, but don’t sign any contracts or give a deposit until you talk to your insurer.