"The cosmos is neither moral or immoral; only people are. He who would move the world must first move himself. "
- Edward Ericson
No matter where you live, natural disasters are a part of life, occurring suddenly and without warning. While some parts of the world are more susceptible than others, no one is ever completely free from the threat of natural disasters ; the most recent example being the unexpected COVID-19 pandemic.
Properties such as homes destroyed by disasters can be repaired or rebuilt with some effort, however if a business is knocked out of commission for an indeterminate amount of time, there is a chance they may never recover from the impact. In fact, the Insurance Institute for Business & Home Safety has revealed that more than one in four businesses hit by a disaster never reopen.
Insurance is therefore to protect your business from potential risks. Natural disasters may not be very frequent or common, but having a disaster management plan to prepare will help ensure that your business bounces back and is operational as soon as possible. Here are the different types of insurance you need to be aware of in order to cover your business in the event of a natural disaster.
1) Physical Loss or Property Damage Policy
This is one of the bigger, more common policies that most people whether business or home owners should have, covering physical loss or damage that includes raw materials, inventory, equipment and buildings. It also includes the money to rebuild or repair whatever was damaged by the disasters.
2) Commercial Property Insurance
This type of insurance can protect your business from both minor and major losses. By protecting your building, your sign , your furniture and equipment, your inventory, landscaping and other property, this type of coverage ensures that your business has a future after a disaster strikes.
3) Debris Removal Coverage
Disasters like hurricanes and tornadoes leave behind a lot of debris that needs to be cleared. This is where theDebris Removal Coverage will come handy. Quite common under most Property Insurance policies.
4) Extra Expense Coverage
This policy covers your business for the extra expenses that go beyond the scope of operation costs in the aftermath of a natural disaster. This includes security guards to prevent looting and generators when electricity is down for some time after a storm.
5) Business Interruption Insurance
This type of insurance covers lost income and profits from a forced shut down. This policy is critical as it helps a lot of businesses, particularly small or independent businesses to stay afloat once they start their operations after a disaster.
6) Business Income Policy
Covering the payment of bills and payroll, and thus helping your business continue normal operating expenses once you reopen. This coverage helps replace lost net income, continuing normal operating expenses, and also pays for relocation expenses and advertising fees if the business moves to a temporary site.
7) Region-Specific Insurance
It’s vital that you know and are aware and up-to-date regarding which specific disasters could affect the area you live in/operate your business from. Depending on the region, and particularly in high-risk areas, there subsidized insurance pools that provide appropriate coverages to residents. If you have questions or need more information on this particular type of coverage, you’re encouraged to visit the FEMA website.
8) Earthquake Insurance
The last thing you want to do after an unexpected earthquake is pay to rebuild your home and restore your property. Earthquake insurance takes away the stress of having to pay to rebuild your home or property after an earthquake by filling in the coverage gap left behind by a homeowner’s insurance policy. It’s smart and proactive to get an earthquake insurance quote early, given the unpredictable nature of earthquakes.
9) Flood Insurance
Data from FEMA, suggests that floods are the most commonly natural disaster. The business income policy covers damage caused by the likes of fire, wide, hail, vandalism etc, but doesn’t cover flood damage. This is where the flood insurance policy proves useful as it covers damages caused by rising water, especially in low-lying areas. Note that since the flood insurance coverage kicks in after a month of signing , it’s best to sign up as soon as possible.
10) Additional/Optional Coverage
In addition to vital policies, there are certain policies which act as supplements to the regular coverage. These policies which can be purchased are useful in case your business includes ground pool or outdoor spa. There are also other policy options that allow you to buy cell phones for your employees when utilities and telecommunications are down.
Insurance can be expensive and daunting, but they are a vital part of any business. The best way to choose what policy or combination of policies suit you is by talking to your insurance agent in order to accurately assess potential risk exposure and keep your business as well as yourself safe and thriving.