Photo:Frank Provenzano, owner of Golf Cart Warehouse in Palm Harbor, Florida, surveys damage after Hurricane Irma.
Small Business Advice
Reflections on Hurricanes Harvey and Irma
Q: Given the disastrous effects of the two most recent hurricanes on both individuals and businesses, what can one do mitigate the financial impact of a natural disaster?
A: In addition to hurricanes, there are also tornadoes, floods, earthquakes, mudslides and forest fires. Also man-made disasters like, riot, civil commotion and terrorists attacks.
The most obvious way to mitigate the financial effects is to purchase insurance. However, most homeowner and business owner policies do not automatically cover all of these happenings.
Generally, these policies do not cover flood damage. The National Flood Insurance Program offers flood and mudflow coverage up to $250,000 for a homeowner and $500,000 for a business. This insurance must be purchased 30 days in advance of a flood. See www.floodsmart.gov.
Likewise, windstorm (i.e., hurricane and tornado) coverage is excluded from these policies in some states and must be purchased separately from a state sponsored windstorm pool.
Earthquake coverage is generally available as a supplemental coverage to your standard homeowners, renters or business policy. It is sold through private insurers, so contact your company or agent for more information.
Under the Terrorism Risk Insurance Act of 2002, only businesses that purchase optional terrorism coverage are covered for losses arising from terrorist acts. The exception is workers’ compensation, which covers injuries and deaths due to acts of terrorism.
For the business owner, the purchase of business interruption insurance is a must. This covers your loss of income due to a covered property damage claim.
While adequate insurance is important, it is also critical that the business have a back-up plan in place. Such a plan should consider the following:
- Develop an Operational Contingency Plan – Assess the feasibility of operating out of nearby rented office space, storefront or even your home. Determine what equipment and other resources will be needed to continue operations (important documents, back-up copies of computer records and software, etc.)
- Ensure the Safety of Employees and Customers – Develop an evacuation plan that includes access to shelters, hospitals and other emergency services. Keep emergency telephone numbers clearly posted and maintain up-to-date emergency contact and essential medical information for all employees.
- Perform a Safety Inventory – Regularly clean and test smoke detectors, changing the batteries at least once a year. Make sure you have several well-stocked first aid kits and that all fire extinguishers are fully charged. Purchase portable generators for emergency power and make sure that the fuel is fresh and safely stored.
Gray Poehler is a volunteer with the Naples Chapter of SCORE.
A SCORE counselor since 2005, Gray Poehler owned and operated an independent insurance agency with 20 employees and two locations. He has earned the Certified Insurance Counselor designation and is familiar with both personal and commercial property and casualty insurance. Areas of expertise include: Business Finance and Accounting; Business Strategy and Planning; Business Operations; Human Resources and Internal Communications; Sales, Marketing and Public Relations.
To learn more about management issues of small businesses, contact the SCORE office nearest you.