How a Disaster Plan and Business Income Coverage can Save Your Business

The F3 Tornado that came though Dallas in October of 2019 was a huge disrupter to many people and businesses, costing over $2 billion in property and economic damages. Many businesses were shut down for days and weeks after.  Many businesses had Disaster Plans and many did not. Having a Disaster Plan in place is an important component to the continuation of your business. 

When we talk to our clients about creating a Disaster Plan, we encourage them and their team to think about:

What does a shutdown to your business look like? Every business is a little different. What if you’re shut down for 1 day, 3 days, a week or longer. The current shutdown (Covid-19) has taught us a lot, I think, for many of us working remotely. What if you’re shutdown, but your competitor is not? How will you continue to offer goods and services to your clients. What about your employees? How and who will you keep?

For manufacturing companies, it can become even more complicated.

Do you have an agreement with a like business to do your manufacturing there? Can you outsource your manufacturing? What if your supplier goes down? Do you have an alternate option to get what you need to continue manufacturing?

Your bills don’t stop when you’re shutdown. How will you pay those bills?

Business Income Actual Loss Sustained with Extra Expense including Payroll – is one of the best coverages you’ll see to keep your business going. It’s a huge issue right now because of Corona, because Business Income is generally kicked in when you have physical damage to your property, and the virus doesn’t seem to fit that. Court cases are in the works coming to settle it soon.

Other questions you will likely need to think about when creating your Disaster Plan:

Where is your data? How can you access your clients and vendors information if you don’t have access to your place of work? Or you experience a cyber disaster and cyber thieves lock down all your data unless you pay them tens to hundreds of thousands in bitcoin. This is not just the stuff of movies, it is happening more and more often. Cyber thieves go into your clients or employees email. They’re smart. They will email you from with an email that looks like it’s from your client about a job you’re working on. They will send you an invoice for an amount that is reasonable with wiring instructions and the money is gone.

Going back to physical property—

If your building is totally destroyed, how long would it take you to rebuild, get your machinery in place, replace your inventory, begin producing again. 3 months? 6 months? How much money will you need to keep going?

Have you insured your building properly? Do you have enough building insurance? Enough property insurance? Are you insured up to your co-insurance clause? Do you have Electronic Data Protection? Do you have cyber insurance? Do you have all of the numbers of your service providers?

We get it. It’s a lot. We’re here to help. These are only some of the questions you need to get you started. Hopefully, you will never experience a Katrina or Rita or anything of the like. Running a business is hard work, and is no easy task. Taking the time to make and write out your plan, and updating it annually can not only save you a ton of headache, but potentially save your business and all your hard work from financial ruin.

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