|
Whether you are running
a home-based business or a small business, it’s
necessary to obtain insurance to protect your
profits and the business itself.
To determine what the best
type of coverage is for your situation, it’s best
to start with your current insurance agent (who
provides you with auto/homeowner/renter, etc insurance).
If this agent cannot provide the business policy,
he or she can point you to a qualified agent who
can.
As with homeowner, renter
and auto policies, business insurance protects
your business possessions (computers, merchandise,
furniture, etc) as well as your liability. If
someone hurts himself at your business, you are
protected. If a burglary occurs and your business
equipment is stolen, you’re covered. Additionally,
if you own the building in which your business
is housed, you are covered in the event that the
building is damaged or destroyed. If you rent
space for your office, the building is covered
under the landlord’s policy, but you still must
insure your possessions and yourself against liability.
The Insurance Information
Institute (www.iii.org) recommends the following
precautions for all business owners. These precautions
can help save you money on business losses and
insurance policies.
1. Minimize the risk
of damage in advance of an emergency:
- Train employees
in fire safety particularly those responsible
for storage areas, housekeeping, maintenance
and operations where open flames or flammable
substances are used.
- Modernize
the electrical system since faulty wiring causes
a large percentage of nonresidential fires.
- Situate
your business in a fire-resistant building -
a structure made of non-combustible materials
with firewalls that create barriers to the spread
of fires - and in a building with a fire alarm
system connected to the local fire department.
- Limit storm-related
damage by making sure the building conforms
to damage-resistant building codes.
2. Develop a disaster
recover plan:
- Keep duplicate
records of both computerized and written records.
Under federal law, if companies fail to maintain
accurate business records and to safeguard those
records, the company may be held liable.
- In order
to maintain market share while the business
is closed for repairs, identify the critical
business activities and the resources needed
to support them.
- Plan for
the worst possible scenario. Do research before
a disaster strikes by finding alternative facilities,
equipment and supplies and locating qualified
contractors.
- Set up
an emergency response plan and train employees
how to carry it out. Consider the things you
may need to initialize during an emergency such
as back-up sources of power and communications
systems. Also, consider the supplies that may
be needed such as first-aid kits and flashlights.
- Compile
a list of important phone numbers and addresses
including local and state emergency management
agencies, major clients, contractors, suppliers,
realtors, financial institutions, insurance
agents and claims representatives. The list
should also include employees and company officials.
Keep copies off the premises in case the disaster
is widespread.
- Decide
on a communications strategy to prevent loss
of clients/customers. It is imperative for clients
and customers to know how to contact your company
at its new location. Among the possibilities
to explore, depending on the circumstances,
are posting notices outside the original premises,
contacting clients by phone or mail, placing
a notice in local newspapers and asking friends
and acquaintances in the local business community
to help disseminate the information.
3. Review Insurance Program:
For Property -
- Typically,
property insurance policies exclude coverage
for flood damage. If your business is located
in a flood zone, you will probably need to buy
a flood insurance policy from the National
Flood Insurance Program.
- The federal
government requires buildings in flood zones
that don't conform to flood plan building codes
be torn down if damage exceeds 50 percent of
the market value. Consider purchasing ordinance
or law coverage to help pay for the extra costs
of tearing down the structure and rebuilding
it.
- If your
policy contains a coinsurance clause, make sure
your property is sufficiently insured in compliance
with the clause.
For Business Interruption
-
- Business
interruption insurance compensates for income
lost if your company has to vacate the premises
due to disaster-related damage.
- Business
interruption insurance covers the profits you
would have earned, based on your financial records,
had the disaster not occurred.
- The policy
covers operating expenses that continue like
electricity even though business activities
have come to a temporary halt.
- Make sure
the policy limits are sufficient to cover your
company for more than a few days.
- The price
of the policy is related to the risk of a fire
or other disaster damaging your premises.
For Extra Expenses -
- Extra expense
insurance reimburses your company for a reasonable
sum of money that it spends, over and above
normal operating expenses, to avoid having to
shut down during the restoration period.
- Usually
extra expense insurance will only be paid if
the extra expenses help to decrease business
interruption costs.
- In some
instances, extra expense insurance alone may
provide sufficient coverage, without the purchase
of business interruption insurance.
|
