In the aftermath of Hurricanes Ivan and Ike — or this summer’s Midwest flooding or California wildfires — thousands of small-business owners are being hit with the bills for salvaging their building or the business itself, because they didn’t carry enough (or the right type of) coverage. Insurance is always a gamble.
For example, a number of communities flooded this summer when the Mississippi spilled over its banks were considered far enough from the river to be safe; which meant that some businesses owners chose not to buy Flood insurance. However, no matter where you’re located, if a small stream near your business swells up after an unusually long period of rain and water pours in through the windows or door, coverage through the federal National Flood Insurance Program will pick up the tab. For more information, visit the program’s Web site, www.Floodsmart.gov.
Similarly, a standard policy probably won’t cover earthquake damage. California businesses can buy insurance through the state-run California Earthquake Authority at www.Earthquakeauthority.com. However, other states are highly vulnerable to quakes; the largest temblor in U.S. history, centered on New Madrid, Missouri in 1812, caused damage in half a dozen states and reshaped a section of the Mississippi River.
In the aftermath of September 11, insurance companies generally require businesses to purchase separate Terrorism policies. You don’t need to be in a high-profile target area such as New York City to consider this coverage. If you’re close to a federal courthouse or administrative building, it might be a good idea.
Many businesses buy Property insurance to protect themselves against losses from such perils as wind, rain, and hail. They’d be better off with a Business Owners Policy (BOP), which includes Property coverage, together with Business Interruption insurance. This invaluable coverage will pick up the tab for your company’s operating expenses and lost profit if the business is shut down for an extended period. That can include salaries and employee benefits, rent and line-of-credit payments. It doesn’t have to be a natural disaster that shuts down the business; even losses stemming from a power outage can be covered.
Some small companies should carry special policies because of the kind of business they’re in. For example, a heavily damaged bed and breakfast that would need to restore its quaint ambience by purchasing antiques would probably need additional “guaranteed replacement” coverage. For more information on business insurance, check out the Insurance Information Institute Web site, www.iii.org. To help make sure your business is protected against disaster, feel free to contact our risk management specialists.