Every year Alabama bears the brunt of the Atlantic hurricane season that runs from June to November. On average, the hurricane season produces 14 storms, with seven of them becoming hurricanes, including three major storms.
If you have a small business, you are aware of the risks hurricanes can pose to your business. All it takes is one devastating storm to destroy expensive equipment or merchandise and disrupt your business for months. That is why you should prepare your small business for the hurricane season.
Start by assessing the flood risk of your business premises and take the necessary measures to mitigate damage during storms. Use the FEMA flood map to assess the flood risk of your area. Then explore ways of keeping your business running in case of a disruption.
You can secure an alternative office space that is less prone to disruption, such as a basement. Make sure you have the minimal infrastructure needed to keep the business running, like an emergency power supply, data backups, and alternative communication lines.
Understand Commercial Property Insurance
If you run your business on a rented property, the owner probably has commercial property insurance. While this policy covers most damages and repairs to the property, it has some limitations. For example, standard commercial building insurance does not cover storm flooding.
However, even the most comprehensive policies have some exclusions. Most property insurance policies do not cover earthquakes and flood damage unless there are appropriate provisions. Therefore, the commercial insurance policy held by the owner may not cover some of the damages and losses you may incur during a storm.
Get Business Insurance
If you are a tenant, you need business insurance to cover damages and losses that may occur during hurricanes. And if you own the property and have commercial building insurance, you still need business insurance.
Business insurance secures all the property held inside the rented premises. The business insurance covers the business premises, the furniture, equipment and machinery, furnishings, inventory, and fixtures. You may also need to buy a separate insurance policy for expensive equipment.
If you run your business from home, you shouldn’t rely on homeowner policies to protect your business. Most homeowner policies exclude commercial property unless you include the relevant riders. However, even if you have homeowner riders, you won’t get as much coverage as if you had business insurance. To be on the safe side, buy business insurance to cover the part of your home dedicated to the business.
Ensure Adequate Coverage
Most insurers give you options to insure your business premises at their actual cash value or the replacement value. Replacement value means that the insurer will help replace all the damaged or lost property at the current market rates. In contrast, actual cash value coverage will only compensate you for the property lost at face value while accounting for depreciation.
Typically, replacement value policies cost more than actual cash value policies. However, the extra coverage costs are worthwhile because you get enough payout to restart your business in case of a claim. The actual cash value policy may seem to be cheap, but the compensation may not be sufficient to help you resume business after a storm. You may have to inject extra capital to help your business stand.
For extra security, you can include the business interruption rider in your policy. This provision helps you cover fixed expenses such as rent when a storm disrupts your business. Some insurers provide a comprehensive business owner policy covering property, general liability, and business interruption at a discounted rate for small businesses.
If the premises is located in a flood-prone area, you may include a hurricane or flood insurance rider. This provision covers damages and losses caused by water getting to your premises.
Work with Reliable Agents
Starke Agency, Inc. is an insurance agency and risk management firm based in Montgomery, AL. We work with businesses to ensure they are adequately covered and confident going into the future. Contact Starke for information about your insurance options to keep your small business safe during hurricane season.