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Then Hurricane Katrina hit. Morgan's office was inaccessible for five weeks. Although insurance did not cover all his losses, it helped fund renting and equipping a temporary office as well as making payroll when revenue dried up as the city flooded, says Morgan, who expects sales of $11.5 million this year.
Money can make a difference in how quickly--and even if--a company rebounds from a disaster. Armand J. DiNapoli, a broker for Lockton Companies LLC, an insurance and risk-management firm, suggests reviewing your coverage to be sure you'll have sufficient funds if a catastrophe strikes.
Most standard business-owner policies provide property, liability and business interruption coverage, but they may not be tailored specifically to your needs. "Read the fine print to understand what they mean by 'interruption,'" Morgan, 37, says--a lesson he learned when an insurer refused to pay a substantial portion of his lost revenue and relocation claim. Adjust your limits, or purchase endorsements for additional coverage if necessary.
Other issues to consider include key man and disability insurance, which will pay if the disaster causes the death or disability of an owner or critical staffer. Disability insurance may be coupled with business overhead coverage, which reimburses overhead expenses if you become disabled. Also, be sure your vehicle coverage is up-to-date and that all business vehicles are listed on the policy.
Keep in mind that if you have a product that was used in the disaster zone that either failed or caused harm, or you provide products or services used in recovery and restoration efforts, you can face liability.
Also, find out what your broker's disaster plan is, says DiNapoli. If your operation is disrupted by a major storm, it's likely your broker's local office will be in the same situation.
Practice what to do when disaster strikes. And if it does, document everything. Give the adjuster all the information necessary to justify their paying out the maximum amount possible. DiNapoli says that at worst, you'll have the biggest file on the adjustor's desk; at best, your claim will be processed quickly for the full amount.
Jacquelyn Lynnis a freelance business writer in Orlando, Florida.