When the wind blows …or worse

Published 4:33 pm Friday, November 16, 2018

volcano in Hawaii, wildfires in the West, floods in the Midwest, hurricanes on the Gulf Coast, snowstorms in the Northeast – what’s a business to do?

According to the Federal Emergency Management Agency (FEMA), 40% of businesses do not reopen after a disaster and another 25% fail within one year. But it doesn’t take a natural disaster to put a business in the dark. So what, exactly, is a business to do? Plan.

THERE’S A POLICY FOR THAT

A good place to start is with property hazard or general liability insurance. General liability combines coverage for damaged property and for people, should someone on the premises suffer bodily injury.

Keep in mind that these policies may need to be supplemented with additional policies or riders to help your business recover after a disruption.

Business interruption, catastrophe, or business income insurance protects you from profit losses and is available for two scenarios:  Loss of income because business operations are interrupted, and the reimbursement of expenses you incur in an effort to keep your business going. It can also cover employee salaries.

Carefully review any type of insurance policy, because they often name exclusions that would surprise you. For example, a “Named Peril” policy only covers the disasters named within the policy, such as fire or vandalism. If a disaster occurs that you couldn’t even imagine – like a meteor crashing into your building – this type of policy would not cover that damage.

A comprehensive all-risk policy covers damage caused by all types of perils, and any exceptions will be named within the policy. But read the fine print because it may specifically name coverage exceptions, like earthquake and flood damage.

Some policies allow you to include additional perils for an extra fee. Note, however, that all flood policies are offered through the federal flood insurance program.

A business owner policy (BOP) can be customized to combine several different insurance policies under one umbrella. You can generally receive a lower single premium and easier administration with a BOP, which may include property insurance, business interruption insurance, vehicle coverage and professional liability.

MAKE IT YOUR POLICY TO PLAN

Be ready for anything with a business continuity plan. This is vital for your business to prepare for, survive and recover from any type of disaster. To get started, consider using free resources available at disastersafety.org. Then share the plan with employees, assign responsibilities and offer training so everybody knows what to do.

Of course there’s far more that can be done and more planning that can take place. For additional information, visit the IBHS website at disastersafety.org. They provide a wealth of tools (they call toolkits), resources, links and ideas that can help you get started.

NEXT STEPS

• Talk to your insurance agent to make sure you have sufficient coverage.

• Create a continuity plan and review it with your employees.

• Choose a remote site at which to store critical information/ data, files, product/inventory, etc.

• Talk with your advisor about coordinating policies – based on your overall financial plan – with your broker and setting up a contingency fund for quick access to funds immediately after an unforeseen event.

Material created by Raymond James for use by its advisors. The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with any other entity listed herein. © 2018 Raymond James Financial Services, Inc., member FINRA/SIPC. Securities offered through Raymond James Financial Services Advisors, Inc. 17-BDMKT-2799 BS 7/18

Stephen P. Poitevint, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.  Stephen P. Poitevint is located at 908 Tallahassee Highway, Bainbridge, Georgia, and can be contacted at (229) 246-7208 or www.poitevint.com.