Two hurricanes a few weeks apart wrought devastation in Texas, Florida and beyond. Prepare for the next natural disaster with flood and business interruption insurance.
Hurricane Harvey is long gone, and as of this writing Hurricane Irma has weakened to a tropical depression. In the wake of the disaster that Hurricane Harvey left behind, experts estimate up to $23 billion dollars in damage in just two southeast Texas counties.1 Early estimates rank Irma as a $65 billion catastrophe.2 Were the people, homes and businesses struck covered with adequate flood and/or business interruption insurance? Time will tell.
Those numbers reflect market value, rather than total storm damage, and don’t include the hurricanes’ total reach. Experts are still calculating the total cost of damage of both storms that impacted a wide swath of states. Wherever the damage totals land, it’ll take many business owners—especially those of small businesses—years to rebuild, if they do at all. Over 40% of small businesses don’t reopen after a disaster because they simply don’t have the resources.3
If the aftermath of Harvey isn’t enough of a warning to business owners about storms wreaking havoc, Hurricane Irma hit the entire state of Florida a week ago and worked her way into Georgia and beyond. Irma was the most powerful hurricane on record, but it weakened substantially after making landfall. Still, business owners, particularly in south Florida, are now left assessing the damage.
These back-to-back storms leave us with serious considerations before the next hurricane hits:
1. Develop a business continuity plan
Harvey put the brakes on the fifth largest economy in the U.S. for a few days—and it’s very slowly beginning to move again.4
Obviously, it may not be possible (or safe) to work during a hurricane. However, depending on the effects of the storm, you may be able to resume business at an alternate location—if you’ve planned in advance.
Before a storm hits, review your employees’ contact information to ensure it’s up to date.
It may be easy to reach people on social media, email, by phone or text, but consider how power outages, cell service and even email servers might be affected by a natural disaster.
In addition to your employees, you should also make sure your suppliers and partner companies are available. If your supply chain is disrupted by the same natural disaster—or another one that doesn’t directly affect you—you might still have to deal with the fallout.
2. Get the right types of insurance—and review coverage periodically
Business interruption insurance will cover expenses your business incurs if you can’t operate due to a hurricane or other natural disaster. Review your limits periodically to ensure you’ve got adequate coverage. It’s easy to underestimate what you need to try and save money—in reality, business might resume just a few days after a storm hits, but you could feel the effects long after it.
On the other hand, if your business has been severely damaged, you may need to rebuild. Make sure your business interruption insurance includes coverage for payroll. If you can’t work remotely during the rebuilding phase, you want to ensure that your employees are compensated until they’re able to work again.
Typical property insurance covers the effects of natural disasters like lightning damage or wind damage. But it doesn’t cover damage caused by flooding. Hurricane Harvey dumped an unprecedented 51.8 inches of rain on parts of Houston, which is more rain than the city usually accumulates in a year.5 Many businesses in the storm’s path did not have flood insurance, which means there may be few options for filing flood-related claims. Business owners should look to the federal government’s National Flood Insurance Program, which can issue policies that cover businesses in the event of a flood.su
3. Consider the emotional toll on employees
Your business was hit by a hurricane; that means your employees’ homes were likely affected, too. Hurricane Harvey displaced an estimated one million people.6 While getting your business back up and running is a priority for you, consider the impact of the storm on your colleagues.
Following a natural disaster, it’s important to keep the lines of communication open and be flexible with employees as they deal with damage to their homes. Put policies in place before a storm hits that outline how you’ll handle working after the storm. Your employees may need to work flexible hours while they care for kids who aren’t able to go to school or elderly relatives who typically live on their own or at a nursing home or assisted living facility.
4. Organize and protect your records
In the days leading up to a forecasted hurricane or other severe weather, you’ll likely want to spend it preparing for physical damage, preparing to evacuate and making sure that your family and your employees’ families are safe. You don’t want to spend it scrambling to organize your policy files.
While most of the information you need is on the web, make sure you know can easily access it from your phone. You might also want to print out backup copies of policies and carry them with you so you can reach out to insurers after the event.
When it’s time to assess the damage and begin rebuilding, put your smartphone to use. Take pictures and video to capture the damage to your business. As an added measure, take pictures of paper receipts during your rebuilding efforts as a backup. It’s an easy way to help you document your expenses that can contribute to your deductible.
5. Partner with a Property & Casualty expert
Deep expertise from your insurance broker is key in ensuring your policies are well explained and include adequate coverage. Look particularly for risk mitigation experience in your particular industry.
These recent powerful storms are a reminder to prepare ahead of time for these types of natural disasters—even if you don’t think it can happen to you. No doubt, some businesses that are beginning the rebuilding process after Harvey, and now Irma, believed it would never happen to them either. But the storm proved, once again, it’s better to be safe than sorry.
All employers need to provide a safe workplace to their employees, and drug policies should reflect this. Employers should review their workplace drug policies often, update training for new and incumbent employees, and communicate with employees as laws change in the coming years.
1 Fortune, “Hurricane Harvey Has Damaged at Least $23 Billion of Property in Just Two Texas Counties”
2 CNBC, “Hurricane Irma…Up to $65 Billion in Damage is Projected”
3 FEMA, “Protecting Your Business”
4 NPR, “Economic Impact Of Harvey Could Be Felt Nationwide Before It’s Over”
5 Houston Chronicle, “Hurricane Harvey by the numbers”
6 Reuters, “A Week After Harvey, Cities Deluged and 1 Million Displaced”
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© 2017 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.