RICHMOND — Natural disasters can take a huge toll on businesses and sidetrack the best laid plans and projections. In fact, an estimated 40 percent of businesses do not reopen after a disaster, according to the Federal Emergency Management Agency (FEMA). Another 25 percent fail within one year following a disaster.
No business or individual is immune to disasters. Even disasters far away can impact your business by disrupting supply chains and communications. Small businesses are particularly vulnerable when it comes to natural disasters since they often have fewer resources, locations and employees to help them become operational again.
The State Corporation Commission's (SCC) Bureau of Insurance (Bureau) strongly suggests that small businesses review their insurance coverage regularly and adjust it, as needed, when considering their insurance needs, including the possibility of a natural disaster. Know what your policies cover and how much you will need to make repairs and pay creditors, employees and yourself in the event of a disaster. "How you plan for, and deal with, disasters can determine whether your business survives," said Virginia Insurance Commissioner Scott A. White. "Having the right insurance coverage and keeping it updated regularly is a must when preparing for the unexpected."
Businesses should determine whether additional or separate coverages are needed. For example, standard business insurance policies typically do not cover damage from certain types of disasters, such as floods and earthquakes, and separate coverage may be needed. Similarly, businesses may need to buy separate automobile insurance for cars and other vehicles because standard business policies cover only real property. Another option to consider is business interruption insurance, which covers the loss of income that a business suffers after a disaster.
Other things small-business owners can do protect their employees, property and operations include the following:
- Determine whether the business is located in an area at high risk of certain disasters, such as floods or fires.
- Develop a business continuity plan and practice it with employees. Make sure the plan includes employee contact information, backup vendors or suppliers and a temporary relocation site.
- Develop a system for how you will communicate and procedures for work processes and payroll. Keep in mind that employees might be working from different locations and that internet and other critical business services might not be working normally.
- Have disaster provisions at the workplace, along with evacuation maps and a working radio to hear instructions from local authorities.
- Store in a safe place any records your insurance provider will need to see after an emergency.
- Back up all personal and company data on a regular basis to help ensure you are prepared in case information is lost during a disaster.
- During a disaster, depending on the risks, ask employees to shelter in place or evacuate immediately.
- After a disaster strikes your business, contact your insurance agent immediately and ask what information is needed to file a claim.
The Bureau of Insurance offers free guides specifically geared to businesses. For more information, contact the Consumer Services Section of the Bureau of Insurance Property and Casualty Division toll-free at 1-877-310-6560 or in Richmond at 804-371-9185 or visit https://www.scc.virginia.gov/boi/index.aspx.
For additional emergency preparedness information relating to disasters visit www.vaemergency.gov.