The right insurance coverage helps you get back to business after a disaster

Amy Higgins

Every business big and small should formulate a game plan for when disaster strikes. Mother Nature, crooks and accidents could cause big-time trouble, but with a little preparation -- and the right insurance coverage -- you can make sure your business bounces back from catastrophe.

Get the right coverage
Make sure you get coverage that fits your business. Owners of home-based businesses might be under the impression that they are covered under their home insurance policies. This is true in some cases, but the Insurance Information Institute warns that your home insurance policy probably covers a maximum of $2,500 for business equipment in the home.

Getting increased coverage can be as simple as adding an endorsement, which can raise your policy limits from $2,500 to $5,000 for as little as $25 a year, according to the Insurance Information Institute. But even that won't cover business-related liability, damaged records or lost income in the event your home office is so badly damaged you're unable to conduct business.

If you're not working from home, a business owner's policy is your best bet if you run a small to midsize business, according to Nationwide. Nationwide defines small to midsize businesses as those with fewer than 100 employees and less than $5 million in annual sales. A business owner's policy combines property, liability and business interruption insurance coverage.

Business owner's insurance premiums are based on a variety of factors, including location, financial stability, building construction and security features, according to the Insurance Information Institute. Because business owner's insurance policies usually package a bunch of coverage types together, it's usually cheaper to buy the whole package than it would be to buy the coverage in pieces.

Prepare for unexpected costs

Repairing your building and replacing equipment are just some of the costs you'll face after a disaster hits your business. What about all that income you lose while you get back on your feet?

Business interruption insurance is a critical component to any business owner's policy, as it will reimburse you for lost revenue in the event you must temporarily close after a disaster. Business interruption insurance covers operating expenses, like electricity, that continue even though business has come to a temporary halt, and it also compensates you for the extra expenses that may arise if you must temporarily relocate, according to the Insurance Information Institute.

Some specialty business insurance companies like NAS Insurance Services offer enhanced business interruption protection. NAS' Regulatory Business Interruption gives qualifying business owners expanded coverage for mandatory and voluntary evacuation because of threats like disease, infestation, terrorism, homicide, suicide and workplace violence.

Be sure you have enough insurance to cover your entire business inventory. An insurance inventory that includes photographs, receipts and serial numbers will come in handy if you file an insurance claim.

Assemble an emergency kit

Agility Recovery Solutions, a business continuity solutions company, suggests you have several kits in easily accessible areas to help you and your employees ride out a disaster. The company's disaster checklist suggests including these items:

  • Important business documents: Insurance policies, fixed asset inventory, contracts, employee information.
  • Software and hardware records: Software installation discs, software licensing keys, hardware serial numbers.
  • Office supplies: Stamps, writing utensils, notepads, staplers, staples, tape, printer paper, calculators, letterhead.
  • Emergency items: Cash, one gallon of water per person per day, a map of the area, three-day supply of non-perishable food, battery-powered or crank radio, flashlights, extra batteries, first aid kit, a whistle to signal for help, can opener, blankets.
  • Sanitation supplies: Dust/filter masks, moist towelettes, plastic garbage bags, paper towels.
  • Tools: Duct tape, pocket knife, wrench or pliers to turn off utilities, screwdriver, lighter or matches in a sealed plastic bag.
  • Grab-and-go kits for employees: Medication, first aid kit, cash, emergency contact information.
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