Recent catastrophic events, ranging from natural disasters to terrorist attacks, have clearly demonstrated that the homes, businesses, and communities Americans have invested in over many years can be wiped out in a matter of hours. While there is little you can do to prevent a disaster from striking, there are steps you can take to protect your business from ruin should you be faced with an emergency.

The first step toward protecting your business from disasters involves knowing and understanding the risks you may face. Consider how your business and its operations are vulnerable to disaster situations and investigate what can be done to minimize exposure to these threats. For example, steps may be taken to mitigate potential damage to your facilities caused by certain natural disasters. Depending on the type of disaster likely to strike in your area, you may want to anchor the building’s foundation and roof, add fire-resistant siding, move electrical panels and furnaces to upper levels, install smoke detectors, and clear brush from around the building.

Even with adequate time to prepare for a disaster, significant damage to your business and the resulting disruption may be unavoidable. Considering this, insurance has become an invaluable means of protection in light of disasters.

In order to evaluate your insurance needs, conduct a thorough inventory of your offices and equipment. Keeping up-to-date, detailed information about your company’s buildings, furniture, and equipment, including quality of materials, original purchase prices, and serial numbers, enables you to prove the value of your business property should it be destroyed or otherwise damaged. This may allow for fast, fair payment from your insurance provider and supply proper documentation for tax deductions claimed on losses.

In addition to standard property and liability insurance policies, business owners may be able to customize an insurance program according to their needs through endorsements, which are provisions that can be added to an insurance policy, at an additional cost, in order to alter or expand the policy’s conditions or terms of coverage. In some cases, separate policies may need to be purchased in order to secure proper protection. Consider customizing your business insurance program with the following:

Business interruption insurance generally provides you with coverage for loss of profit and continuing expenses after a business has been wholly or partially disabled by a natural or man-made disaster.

For organizations that must continue to operate after a disaster (e.g. hospitals, newspapers, and insurance agencies/companies), extra expense insurance covers the extraordinary costs of continuing operations. Covered expenses may include overtime wages, extra travel, the costs of working with substitute or makeshift facilities, and the extra costs necessary to expedite repair or replacement of the damaged or destroyed premises.

Certain natural disasters, such as flooding and earthquakes, are not usually covered under property insurance. To be protected in the event of a flood, you must purchase a separate flood insurance policy through your insurance agent in conjunction with the National Flood Insurance Program. Coverage for earthquakes can usually be obtained through a separate endorsement

If a covered peril, such as a fire or tornado, damages your building to the extent that the law requires its demolition or complete renovation, an ordinance or law endorsement provides coverage to rebuild or repair your facilities in compliance with the most recent local building codes.

An accounts receivable endorsement insures you for any amounts that are uncollectable due to a covered loss, as well as for the costs of collecting the accounts and recreating the records.

If your business handles perishables, a spoilage coverage endorsement protects you against losses caused by power and equipment failure, or general contamination resulting from incidents that are beyond your control.

Disasters often occur without warning, but taking the steps to understand your risks and evaluate your insurance needs can help you prepare your business for the unexpected. It is important to periodically review your insurance program in light of your changing business needs. Give us a call for more information.