According to
the Insurance Information Institute, more than 25 percent of all
businesses that close down following a disaster never open their doors
again. A poorly designed insurance program—or misunderstandings about the
extent of coverage—may contribute to a company’s inability to reopen
following a disaster.
Here are a
few key points to consider as you evaluate the adequacy of your business
insurance coverage:
§
Review your policy limits to determine if you have
sufficient coverage in case of a total loss.
§
Keep in mind that although most commercial insurance
policies provide coverage for damage due to wind and wind-driven rain,
coverage is generally not provided for damage from flooding. Flood
insurance is available through the National Flood Insurance Program (NFIP)
administered by the Federal Emergency Management Agency (FEMA).
§
Make certain that you have coverage for indirect damages,
such as the loss of business income if you are forced to temporarily shut
down or curtail your operations.
§
Understand that most standard business interruption policies
do not provide coverage for lost income due to damage to a key supplier or
customer. Separate “contingent business income” or “business income from
dependent properties” coverage is available to protect a business from
loss due to the suspension of a key supplier or customer’s operation from
a covered cause of loss.
§
Be aware that commercial property policies often include
limits—or outright exclusions—for damage caused by mold and fungus.
Broader coverage may be available but can be expensive.
