Natural disasters can take a major toll on businesses and sidetrack the best laid plans and projections. Many businesses do not reopen following a natural disaster and some fail within one year after disaster strikes.
Whether an individual or a business, you are vulnerable to natural disasters that may include hurricanes, floods, tornadoes, wildfires and earthquakes. 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.
Advance planning is essential to safeguard employees, protect assets and minimize disruptions to your business. Having an emergency disaster plan and a business continuity plan in place, as well as adequate insurance coverage, can reduce the risk to a business and help it recover faster.
The State Corporation Commission’s (SCC) Bureau of Insurance (Bureau) strongly encourages small businesses to review their insurance coverage regularly and adjust it, as needed. When evaluating a business’s insurance needs, consider the possibility of a natural disaster. Know what your policies cover and how much money you may need to make repairs and pay employees, creditors and yourself in the event of a disaster. “How you plan for and respond to disasters can determine whether your business survives,” said Virginia Insurance Commissioner Scott A. White. “Protect yourself and your business against the unexpected by having the right insurance coverage and updating it regularly.”
Consider whether additional or separate coverages are needed. For example, separate insurance coverage may be needed for certain types of disasters such as floods and earthquakes because these typically are not covered by standard business insurance policies. Similarly, businesses may need to buy separate automobile insurance for cars and other vehicles because standard business policies cover only real property. Also consider business interruption insurance, which may help cover the loss of income that a business suffers after a disaster.
Small business owners also can take additional steps to protect their employees, property and operations, such as the following:
*Determine whether the business is in an area at high risk for certain types of disasters, such as floods or fires.
*Develop and update business continuity plans to share with employees. Make sure the plan includes current employee contact information, backup vendors or suppliers and a temporary relocation site.
*Develop a system to communicate with employees, vendors, suppliers and customers and procedures for work processes and payroll during a disaster or business interruption. 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 access to a working radio and mobile apps to receive instructions from local authorities.
*Compile an inventory of computer hardware as well as other assets and equipment and keep it in a safe place. Back up all personal and company data on a regular basis in case information is lost during a disaster.
*Keep copies of important records (such as building plans, insurance policies, bank accounts, employee contact information and other priority documents) in a safe, waterproof and fireproof place. Keep a set of records online (employing strong security measures) or at an off-site location.
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 or company immediately and ask what information is needed to file a claim.
The Bureau of Insurance offers free guides specifically geared to businesses. To learn more, 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 scc.virginia.gov/pages/Insurance.
For additional emergency preparedness information relating to disasters, visit vaemergency.gov.
