When disaster strikes, the first thing business owners do is to check and claim on their insurance. However, many small businesses are lacking vital business insurance that protects them from such disasters. According to insurance brokers Bluedrop Services, as many as 40% of businesses are unable to re-open after a disaster as a result of under-insurance and miscalculated business insurance.
It's therefore vital to ensure you've got the appropriate level of cover for your business. Here's how:
Consider the risks for small businesses
To plan for the future, you need to identify the potential risks to your small business, including the health and safety of your staff. Whether they work within an office or remotely, you will need to ensure they are protected from risks such as injury or illnesses caused by work.
Depending on the location of your business, you should consider which natural disasters are potentially likely to affect you. For example, being located near a river that is prone to flooding or being based in a remote area that experiences heavy snowfall may lead to disruption in accessing your offices.
Damage to equipment and machinery that interrupts work functionality can also put your business at risk, especially if your business is reliant on this equipment.
Lost or stolen data is a massive risk and one that can affect many businesses. If you don’t have the right business insurance cover in place, losing personal data or being hacked can cost your businesses millions, depending on the severity of the situation.
How business insurance can help
Business insurance is there to protect businesses when things go wrong. There are various policies available to protect a variety of risks, although your small business should already have some kind of business insurance. To protect your business from any future risk, you need to understand what areas of your business are exposed and what business insurance you need to cover them.
Business buildings insurance
If you own the building your business operates from, then you will need business buildings insurance to cover the cost of the repairs. This cover protects you from fire, water or storm damages to the building. However, if you are only renting the office, your landlord will be responsible for the costs and you will need to report any damages to them. If the damage is bad enough that the premises won’t be able to open for a while, then you will need business interruption insurance.
Business interruption insurance
Also known as business income insurance, business interruption insurance covers you for the financial impact of interruption resulting from damage to your business premises from natural disasters such as floods, earthquakes, hurricanes and fires, including events like terrorism, theft, broken machinery and cyber-attacks.
This cover helps to re-open closed businesses following a disaster; you can also purchase additional add-ons to business interruption insurance to protect your business from various other risks which may be specific to your business.
Employer liability insurance
You must protect your employees in the event of a disaster. Employer liability insurance is a legal requirement if you have staff, so you likely have cover in place already. This cover protects your employees if they fall ill or injure themselves at work. You must have the right safety measures in place to protect your staff from harmful substances, obstacles or hazards.
There are various other business insurances available, which you can read more about here.
How to carry on with business as usual
To ensure business continuity, you will have to look at other ways to bring in revenue. You can consider putting systems in place so that your team can operate remotely or, if you have another local office, whether they can work from that location until it is safe to return to the original office.
Using cloud-based systems will mean you can access work from anywhere and will allow your teams to continue as normal. Your disaster recovery plan will also need to include who you need to make aware of any temporary business changes.
Going forward, to protect your small business from future disasters, you will need to continually review your risks and disaster plans by speaking with employees and consider any recent business changes which may impact the plans. You should review your business insurance cover at least once a year to ensure you continue to be fully protected.
About the Author
Doug Kelley is the Director for Bluedrop Services, specialist insurance brokers with in-depth knowledge and expertise in business insurance. Bluedrop Services are specialist insurance brokers covering non-standard insurance. They offer additional support and expert advice in areas to reduce costs and downtime to your business and personal assets.