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Monday, October 20, 2014

Interruption of Business during a Hurricane

By the RestorationSOS Educational Staff

When a hurricane comes ashore, the world pretty much stops turning for whatever community is in its path. Evacuations turn cities and communities into ghost towns and it is all but impossible for any normal activities to continue until the storm has passed and the damage cleaned up. For business and industry, this can be devastating. Time means money, and every day of inactivity means that much more revenue down the drain.

Three Steps Businesses Should Take

There are three basic steps that businesses should take in order to avoid long-term problems related to business interruption as the result of a hurricane or other severe weather event.

Security and Backup of Data – Any important documents and data files should be stored off-site, preferably somewhere out of the danger zone. Storage facilities should be equipped with their own secure servers with backup generators to provide emergency power. This not only allows businesses to continue to do business, even if it is at a reduced level, but it also allows them to retain all information that may be necessary to prove a claim, such as historical cost, serial numbers, equipment suppliers, inventory records, etc.

A Review of Insurance Coverage – Once a storm hits, it is too late to obtain proper insurance coverage, increase limits, or anything of the sort. Make sure the business policy covers all locations and that they are listed correctly in the policy. A careful review of the various business values should be conducted on a regular basis in order to keep the policy up to date and maximize any potential returns.

Business interruption values should also be properly assessed since the problem often goes far beyond simple lost profits. Continuing expenses and loss of revenue must be figured into the mix – was this a complete interruption of operations or a slowdown? The latter is clearly the preferred option for policy holders. Since most business interruption claims are calculated on pre-loss performance as projected through the end of the period of interruption, the business owner should maintain detailed records of all past and pending work. This makes it easier to prove the loss.

Review the Period of Indemnity – Most coverage protects against economic fallout resulting from the date of the loss through the period of restoration. This is the date by which the damage should have been promptly and efficiently repaired. Also, just because a business reopens does not mean that it will be back to 100% operating efficiency, so this period may figure into the claim process as well.

Proper preparation beforehand is the first and best course when it comes to protecting a business from the fallout due to hurricanes or other severe weather events. Keep in mind that it typically takes up to 30 days for a policy to go into effect, so the time to act is before hurricane season begins in earnest.

Recommended Reading
How Hurricanes Affect Businesses
The Importance of a Business Continuity Plan Before a Hurricane

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