It’s That Time Again
June 1 marks the start of this year’s hurricane season. Is your company prepared for disaster?
As a business owner in Southeast Louisiana, who are you going to call to help you make the necessary preparations for your company before disaster strikes? An experienced, reputable insurance company can be a good place to start.
“We are unique in the country, because in South Louisiana the biggest exposure companies face is the threat of hurricanes,” says Marc Eagan, president and CEO of Eagan Insurance Agency. “So, this type of coverage is the most expensive because of our past history. Businesses should absolutely consider drilling down on wind coverage.”
Eagan says it is important for businesses to have a good understanding of exposure on all their property and to have proper coverage. “Understand that you will have a deductible, as well as a percentage of the value of the property that can be insured,” he says, “and that percentage of coverage has a wide range — the payback can be all over the place. Be knowledgeable about what you are purchasing and covering.”
“Natural disasters can happen anytime, anywhere, so insurance companies are constantly monitoring weather patterns so they can shift the necessary human resources and equipment quickly,” says Amy Falcon, State Farm agent and owner of Amy Falcon Insurance Agency. “Technology has changed claim handling, mainly that resources are mobile, less bricks and mortar, which helps control costs and premiums. Every catastrophe is different, and real-time information is key to providing the appropriate response. On the local level, our agency team reviews our catastrophe plan regularly and is on-call to help our clients once an event occurs.
“With hurricane season upon us, it is imperative to have a plan,” Falcon adds. “Do your employees have an evacuation location? Do you have contact information for their extended family, in case cell towers go down? Do your employees know what needs to be done to secure the office, warehouse, etc. prior to closing in advance of a storm? I also encourage every business owner to take photos of their property and backup important programs and documents using media that is easy to transport.”
No business is ever completely immune from a natural disaster. Every year, businesses temporarily shut down — or close forever —because of a disaster such as a flood, fire, tornado or hurricane. Twenty-five percent of businesses do not reopen after a disaster and another 25 percent fail within one year.
“One of the most important things that businesses should do when it comes to protecting themselves is to talk to their insurance provider or agent and review their policies to look for possible gaps,” Falcon says. “Use your agent as a resource, not only for coverage issues, but for helping to develop a disaster plan.”
Eagan agrees that it is important for a business to work with someone whom they have complete confidence in and who will take care of them in their time of need. “It’s not only about price, it’s also about good faith,” he says. “You want to be insured with a solid company that is rated and there when you need them; agents and companies go hand in hand.”
While hurricanes seem to be the type of storm that is most associated with South Louisiana, in February Eastern New Orleans was hit hard by a powerful EF-3 tornado that ripped through an area more than a 1/2-mile wide and 3 miles long, damaging thousands of homes and buildings in its path.
“Having experienced the recent tornadoes both personally and professionally, I would advise business owners to make sure they re-evaluate their property each and every year,” says George Daison, CEO of Underwriters Insurance Agency Inc. “You need to make sure you are insured for what your property is worth, the full value, in order to be fully covered. So many people in New Orleans East have had to apply for small business loans because they were not insured for the full amount of their property or business and had to take out a loan to cover the difference in order to reopen or relocate.
“My whole office was destroyed, but we were prepared and were insured and able to relocate and resume operations,” he adds. “The best protection a business can invest in is a business income and extra expense policy — this is a must-have. This policy will cover you for 90 days and up to a year. It will replace income, and the extra expense part will allow businesses to operate in another location while making repairs.”
Carrying adequate insurance coverage is one way a business can get back on its feet quickly.
“One of the most important things a business can do prior to a disaster is to make sure they have business interruption insurance,” says Eagan. “This type of coverage covers lost income and it pays you during the time your business is out of operation. It covers fire, tornadoes and hurricanes. The very first thing that a business should do when a storm hits is to call their insurance agent. That way the ball will get rolling with getting adjusters and payments.”
Did you know?
Disaster Effects on a Worldwide Scale
According to a recent study conducted by Business Insider, from 2000 to 2015, natural disasters cost the global economy $2.5 trillion, and at least one in three small business owners say they have personally been affected by a storm or extreme weather.
According to The Institute for Business and Home Safety, at least 25 percent of businesses will close after a natural disaster and never reopen. It does not take a major disaster to seriously impact a business; even a loss of power that shuts down phone systems or order processing for a day or so could lead to lost revenue.
Disaster Response and Recovery
In the immediate aftermath of a disaster
Businesses should take the following actions, as appropriate:
Secure your building — boarding up entry points if necessary.
Make temporary repairs — especially to minimize further damage, such as placing a tarp over a hole in your roof.
Relocate salvageable equipment and property to a safe, protected location.
Inspect your property and keep a detailed list of damages; take photos to document damage.
Clean up your property — taking care to wear safety gear such as gloves and protective eyewear. If feasible, save damaged property in case it needs to be inspected by your insurance adjuster.
Contact your insurance professional and your insurer to begin the claims process.
Keep receipts of all expenses related to the disaster.
Once property has been secured and other important steps taken, you can begin to focus on making your business operational once again. You should lay the groundwork for restarting operations in your disaster recovery plan. Issues to consider include:
Location—Should you open a new temporary location or can you operate from your home, or use the facilities of a partner or even friendly competitor?
Communications—How will you communicate with your employees, customers, vendors and suppliers?
Insurance Claims—In addition to filing a property claim, you’ll want to file a business interruption insurance claim, if you carry this type of coverage. This insurance will help you cover costs of relocating as well as lost income.
Source: Insurance Information Institute