Minimize Flooding Loss With Business Interruption Insurance
It takes a lot of work to run a business in Colorado Springs, CO. When the unexpected happens, such as flooding from a broken pipe, what will that interruption mean to your business? Business interruption insurance is supplemental coverage that helps a business weather the financial side of weathering the storm while a water damage and restoration company gets your business back to its preloss condition.
Minimize Losses and Prevent Downtime
Any unexpected downtime means financial losses on top of the costs associated with the repairs needed to fix large water damage. Additional insurance helps businesses stay afloat from financial losses.
Business Interruption Insurance
This type of insurance takes effect when physical damage to a property results in operations being suspended. Although coverage may differ across policies, it typically covers the following:
- Revenue that would have been made if the business was operating normally.
- Payments for loans, mortgages or leases during the downtime.
- Costs associated with temporary or permanent relocation.
- Provides money for employee payroll and taxes.
- Extra expenses incurred due to the event may also be covered.
Steps to Minimize Flooding Loss
While you may be able to count on the additional insurance coverage to keep your business from going under, prevention and planning for the worst are also key to minimizing losses. Every business should develop a business interruption plan. Key elements of this plan often include:
- Determining Risks: Identifying risks, both human and environmental, makes it easier to prepare for them. While some may not be preventable, such as a natural flood, knowing the risk is there enables creating an action plan to better handle the situation if it happens. Risks should be ranked according to severity and likelihood of happening.
- Know the Costs of Unexpected Downtime: Once the risks are known, each one should be analyzed and associated costs calculated. While making the calculations, include lost income, additional expenses, potential penalties or fines and the cost of delaying operations.
- Develop a Mitigation Plan: When developing a plan for controlling potential hazards, prevention, deterrence and mitigation are all essential. The first helps a business identify hazards that are preventable and take measures to avoid them. Deterrence focuses on the potential for criminal activities to happen and taking steps to minimize them. Mitigation focuses on events that are not preventable but require forethought to contain or control.
Establish a Communication Plan: When the unexpected happens, does everyone know what to do? A chain of command should be developed to ensure that vital information is shared properly. To eliminate confusion, develop prescripted messages that are clear and concise.
- Have an Emergency Plan: Along with an evacuation plan to ensure the safety of everyone, there should also be an emergency plan for the business itself. This may include ensuring that data is protected and easily recoverable, inventory essential to operations is well-documented and the business has written contracts with key vendors.
Flooding and other unexpected events can be devastating to a business. If faced with an unexpected shutdown, having business interruption insurance and planning for such events helps reduce associated costs and may keep the business from going under.