Seeing your business swept away by floodwaters or burned to the ground by a wildfire would be devastating. Having the right insurance coverage based on your specific risks and business needs can make the difference between getting back in business in a few days, versus weeks, months, or possibly never. But many small businesses discover they aren’t adequately insured only after they’ve suffered a loss.
Part of your emergency plan should include a thorough insurance review with your insurance professional. Together, you can discuss the potential risks to your business and determine if you have the right coverage, and the right amount of coverage, to keep things running in a worst-case scenario. Here are a few policies to consider depending on your specific weather risks:
Business income insurance. Every for-profit business lives on receivables. Even if your income stops, your expenses keep going and you’ll quickly find yourself underwater. Loss of income is often more serious than direct property damage, and it’s one of the main reasons most businesses fail to reopen after a serious loss. Business Income insurance helps replace lost revenues and covers continuing expenses, including payroll, along with extra expenses necessary to keep your business going.
Business property insurance. Business property insurance can help protect your physical assets, including buildings, equipment, furniture, and product inventory. You can even add protection for accounts receivable records plus computers and media, among other assets.
Flood insurance. Did you know that your property or business owner’s policy probably does not cover flood-related losses? If floods are high on your potential risk list, consider commercial flood insurance offered through the National Flood Insurance Program. It can protect your business from hurricanes, rain, storm surges, and snow melts.
Earthquake insurance. Like flood coverage, most general property policies don’t cover earthquake damage. You may need to purchase a separate earthquake policy to augment your other property coverage. Be aware that earthquake policies generally have a large deductible of 10 percent to 15 percent of the overall policy limit in states where earthquake risk is highest, such as California, Oregon and Washington. There are other aspects of earthquake policies that differ from typical property policies, so check with your insurance professional to pick the coverages that are best for your business.
Find out if investing in property improvements or retrofits, such as bringing your structures up to current building codes, might lower your insurance premiums.
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