Small business owners can control various things about the product, the people, and the marketing, e.g. who they are going to hire, or what they are selling. However, while natural disasters are inevitable, the damages these disasters may cause are not. Unlike larger businesses, small businesses are typically more vulnerable when disaster strikes simply because small businesses don’t have many resources available. In fact, according to the FEMA report, 40-60% of small businesses don’t recover after the hit of a natural disaster.
Good thing there are different types of coverages that will protect your business from natural disasters. If your business is already insured, you might want to review your existing policies to make sure that it covers all your business’ needs. Remember, not all small businesses have the same risks so you might as well be sure about your risk assessment and revisit your coverage, deductibles, limits, and exclusions. Like this, you can ensure that you’re getting the most coverage and that you’re not paying for insurance that your business might not need.
Being prepared by having the right insurance is vital for your business. Protect it by knowing various Natural Disaster insurance coverages available for small businesses such as the following:
Every year, we hear about many devastating stories about the impact of hurricanes, especially on small businesses. It’s possible to get insurance that will cover a variety of property damages at a lower rate depending on your business’ location. However, if you’re located near the tropics such as in Florida, make sure that you get additional coverage for hurricane and flood damage. Commercial Property insurance includes hurricane damage, however not damages caused by a flood. So, you would have to get a separate Commercial Flood insurance policy to cover just that. When getting coverage, consider also the time your business will be closed. Are you still going to survive if you stop operation for a month or more? You may already have hurricane and flood coverage, but those might not be enough if you don’t have the “buffer” that will sustain the business even if it’s non-operational. That’s where Business Interruption coverage comes in – it will cover the loss of income after a disaster so you can be sure that your business is compensated during and after the disaster. Apart from insurance – as hurricanes get closer – you should do certain things to prevent damage. Check out the Tips for Prepping Your Business for a Hurricane.
Southern States: March-May
North + Midwest States: June-July
If the tornado is on the ground, it will be very destructive and will do a lot of damage. Before that happens, you should have already prepared by:
- Having a tornado emergency plan. You must have a safe place where people in your building will seek shelter.
- Creating a post-tornado plan. If ever your business is destroyed, you should already have a place where your employees can work equipped with the necessary things they need such as computers, printers, etc.
- Backing up your business’ data. Back up your business’ records such as the payables, receivables, and invoices to a cloud server to make sure that the information is all safe and can easily be accessed.
And of course, get the right business insurance. A disaster such as a tornado may require additional coverage to your Business Property insurance, though, as there could be some unanticipated costs especially in the aftermath of the disaster. Commercial Auto and Business Interruption are a good add-on. Nevertheless, it would be best to speak to your insurance company to know more about what you might need to be fully covered.
Season: October-January (Exception California: year around)
You might have seen in the news recent wildfires that happened in the US and in Canada. Wildfires can be deadly and can greatly damage properties as a fire spread very quickly. If your business location happens to be in the area which is at high risk for wildfires, we recommend preparing your business by:
- Making sure your employees know fire safety protocol and procedures.
- Having an evacuation plan.
- Making sure fire hazards such as combustible materials are removed from in and around your area.
- Keeping fire extinguishers or sprinklers that are accessible and are in various locations of the building.
You also have to make sure that your insurance coverage is adequate in case of wildfire. Typically, Commercial Property insurance covers damage to the building, equipment, and inventory caused by fire. It covers the cost of rebuilding the building as well as the cost for cleaning ashes from the building and equipment. While this might be enough to cover the bases, we still highly suggest getting Business Interruption insurance as a compliment. It ensures that operating expense due to wildfire is covered, as well as operating costs if ever your business would have to operate in a different location.
Season: Spring-Fall (In spring especially in areas with heavy snowfalls)
Flood is one of the most costly natural disasters in the US where the cost of damage can go up to millions of dollars. If you’re in an area where there are heavy snowfalls, or if you’re near the tropics, don’t wait for the disaster to strike before you start to prepare. The following are some steps you could do before the snow starts to melt or before the next storm:
- Have an evacuation plan and determine which roads would still be passable during the flood.
- Have a survival kit bag which would have medicines, water, non-perishable food, batteries for your flashlight and radio, and personal hygiene supplies.
- Keep a backup copy of all your business’ important documents and transfer them to the cloud.
- Check for valuable items such as appliances and furniture and move them to a higher, safer place.
As we mentioned above, Commercial Property insurance does not cover damage caused by a flood. Consider getting Commercial Flood insurance to cover the cost you’ll incur if your area has been damaged by floodwater. This type of insurance protects not just the building itself, but also the assets inside such as equipment, furniture and fixtures, and other business properties.
Season: Can happen anytime
Earthquake is not just scary, it can also greatly damage infrastructures, and worst, disrupt production. Dangers of an earthquake lie from being stuck with a heavy material, to fire resulting from electrical shorts or gas leaks. Yes, we may not be able to prevent an earthquake from happening, but we can definitely prepare by:
- Regularly conducting earthquake drills, keeping your employees informed of what they should do (i.e. drop, cover, and hold) and where they should go during an earthquake.
- Looking for materials that could potentially be a hazard, and keeping them away.
- Developing a business continuity plan.
- It can cost your business a huge amount to be able to recover from earthquake damage. That’s why the right amount of insurance is important to cover those costs. Earthquake coverage is not included, though, under standard business insurance; you would have to purchase it as an endorsement to your Business Owner’s Policy. That said endorsement must be purchased from the business insurer, which will cover building damages caused by an earthquake, as well as damage to property.
The Commercial Auto insurance whereas covers earthquake damage from fire or falling debris without any endorsement. And again, it’s highly advisable for small businesses to get Business Interruption insurance to ensure that the business will keep its operation even after the disaster.