Taking Care of Business on the Coast

Hurricane Dolly—the fourth named storm of the Atlantic hurricane season and the second hurricane—has come and gone, but according to Federal Forecasters, she won’t be the last. This is shaping up to be a very busy season with a predicted 12 to 16 named storms, 6 to 9 of them being hurricanes. The busiest period for the season is between August and September so, before the next storm makes landfall, it may be a good time to review things you can do to protect your business. 

Review Your Insurance Policy
One of the lessons of Hurricane Katrina was that having hurricane insurance does not necessarily mean you have protection from all of the damage that the hurricane can deal out. Hurricane insurance generally covers wind-related damage. It does not necessarily cover flood damage and as we’ve seen, once the wind passes, it is the lingering floodwaters that are the real problem.

There are various kinds of insurance that come into play when a disaster, such as a hurricane, hits. The key is to have the right mix to cover you properly. According to the Insurance Information Institute (III), these are:

  • Building Coverage . This provides coverage up to the insured value of the building if it is destroyed or damaged by wind/hail, or another covered cause of loss. This policy does not cover damage caused by a flood or storm surge nor does it cover losses due to earth movement, such as a landslide or earthquake, unless added by endorsement.
  • Business Personal Property . This covers contents and business inventory damaged or destroyed by wind/hail, or another covered cause of loss.
  • Tenants Improvements and Betterments . This provides coverage for fixtures, alterations, installations, or additions made as part of the building that the insured occupies but does not own, which are acquired and made at the insured's expense.
  • Additional Property Coverage . This is for items such as fences, pools or awnings at the insured location. Coverage limits vary by type of additional property.
  • Business Income . Very important, this provides coverage for lost revenue and normal operating expenses if the place of business becomes uninhabitable after a loss during the time repairs are being made.
  • Extra Expense . Covers the extra expenses incurred, such as temporary relocation or leasing of business equipment, to avoid or minimize the suspension of operations during the time that repairs are being completed to the normal place of business.
  • Ordinance or Law . This provides coverage to rebuild or repair the building in compliance with the most recent local building codes.

Before you buy your policy, make sure that your coverage is, in fact, comprehensive, that it covers the threats you are likely to face in a hurricane; and that you understand your deductibles. Know what information you will need to verify your claim as well as what kind of claims you can make. The last thing you need when standing amid the soggy wreckage of your business is an unwelcome surprise from your insurance company. 

Planning for Disaster
Once you have your insurance well in hand, it is time to turn to those things that you will have to manage in the event of a hurricane or other disaster. This means putting a disaster plan in place that will insure the safety of your people and the security of your business. Taking time now, before disaster hits, will lower the chances of anyone being hurt or killed while also protecting your business assets and making recovery easier and faster. The III suggests the following steps to prepare for a disaster:
  • Set up an emergency response plan and train employees how to carry it out . Make sure employees know whom to notify about the disaster and what measures to take to preserve life and limit property losses.
  • Write out each step of the plan . Write the plan and assign responsibilities to employees in clear and simple language. Practice the procedures set out in the emergency response plan with regular, scheduled drills.
  • Compile a list of important phone numbers and addresses . Make sure you can get in touch with key people after the disaster. The list should include local and state emergency management agencies, major clients, contractors, suppliers, realtors, financial institutions, insurance agents and insurance company claim representatives.
  • Decide on a communications strategy to prevent loss of customers . Post notices outside your premises; contact clients by phone, email or regular mail; place a notice in local newspapers.
  • Consider the things you may need initially during the emergency . Do you need a back-up source of power? Do you have a back-up communications system?
  • Human Resources . Protect employees and customers from injury on the premises. Consider the possible impact a disaster will have on your employees’ ability to return to work and how customers can return to your shop or receive goods or services.
  • Physical Resources . Inspect your business’ plant(s) and assess the impact a disaster would have on facilities. Make sure your plans conform to local building code requirements.
  • Business Community . Even if your business escapes a disaster, there is still a risk that it could suffer significant losses due to the inability of suppliers to deliver goods or services or a reduction in customers. Businesses should communicate with their suppliers and markets (especially if they are selling to a business as a supplier) about their disaster preparedness and recovery plans, so that everyone is prepared.
  • Protect Your Building . If you own the structure that houses your business, integrate disaster protection for the building as well as the contents into your plan. Consider the financial impact if your business shuts down as a result of a disaster. What would be the impact for a day, a week or an entire revenue period?
  • Keep Duplicate Records . Back-up computerized data files regularly and store them off-premises. Keep copies of important records and documents in a safe deposit box and make sure they’re up-to-date.
  • Identify critical business activities and the resources needed to support them . If you cannot afford to shut down your operations, even temporarily, determine what you require to run the business at another location.
  • Find alternative facilities, equipment and supplies, and locate qualified contractors . Consider a reciprocity agreement with another business. Try to get an advance commitment from at least one contractor to respond to your needs.
  • Protect computer systems and data. Data storage firms offer offsite backups of computer data that can be updated regularly via high-speed modem or through the Internet.
After the Disaster
You have prepared, you have weathered the storm, you have done all you could. The sky is blue again and your business looks like something out of a World at War documentary. Now what? Now, as difficult as this may seem, it is time to pick up the pieces. This is how the Institute for Business and Home Safety (IBHS) suggests you go about it.
  • Protect yourself Always be careful when entering a damaged building.  If there is serious structural damage, contact local officials before entering.  Report downed power lines or gas leaks.  Keep electricity turned off if the building has been flooded.
  • Protect your property Take reasonable steps to protect your property from further damage.  This could mean boarding up windows and salvaging undamaged items.  Your insurance company can tell you what they will pay for regarding protection.
  • Report the loss as soon as possible Contact your insurance agent or insurer as soon as you can.  Provide a general description of the damage and have your policy number handy if possible.  Write down the adjuster’s name, phone number and work schedule as soon as you have them.
  • Prepare a list.  Keep damaged items or portions of them until the claim adjuster has visited, and consider photographing or videotaping the damage to document your claim.  Prepare a list of damaged or lost items for your adjuster.
  • Keep receipts.   If you need to relocate, keep records and receipts for all additional expenses.  Most insurance policies cover emergency living arrangements.
  • Return claim forms After your insurance company has been notified of your claim, it must send you the necessary claim forms within a certain number of days (time period varies by state).  Fill out and return the forms as soon as possible.  If you do not understand the process, be sure to ask questions and write down the explanation.
  • Cleanup When starting the cleanup process, be careful, and use protective eyewear and gloves if available. Adjusters may tell business owners to hire a professional cleaning service.
  • Build stronger next time.  When you’re ready to start repairs or rebuild, work with your contractor to make the new structure disaster-resistant. 
The Bottom Line
The damage done by a hurricane or other natural disaster can disrupt your life and your business for weeks, months or even years. You can’t stop the storm, but if you are prepared for it, you can mitigate much of the damage and have everything you need in place in case you have to rebuild. For more information on disaster preparation and recovery, visit the IBHS website at www.disastersafety.org .