Hazards such as hurricanes, floods, tornadoes, widespread illnesses, and power outages cannot always be prevented by businesses. Accidents happen and can result in business disruption and property damage. For those hazards that cannot be prevented, there are still many opportunities to reduce the potential impacts on life, property and business.
There are many mitigation strategies that can reduce damage from hazards. The first is site selection. Selecting a building site that is not subject to flood, storm surge, or in proximity to hazardous facilities should be one of the first considerations. Building construction should meet state building codes that include requirements for fire protection and life safety. High valued assets including computer systems, expensive production equipment and hazardous processes should be carefully reviewed to determine protective measures.
Strategies to mitigate business disruption include providing redundant power supplies, such as an emergency standby generator for critical equipment. Development of a business continuity plan with recovery strategies is another method of mitigation. Computer network security should also be evaluated to determine whether electronic information is secure.
Purchasing insurance is a way to reduce the financial impact of a business interruption, loss, or damage to a facility or equipment. Insurance companies provide coverage for property damage, business interruption, workers’ compensation, general liability, and other losses. Insurers only pay when the hazard that caused the loss is insured by a policy. Losses caused by a flood are not be covered by standard property insurance policies. Flood insurance coverage for a business located within a flood zone may be purchased through the National Flood Insurance Program. Coverage for other hazards, such as mold, may be provided as part of the basic property insurance but the amount of loss payable under the policy may be limited.
Review your insurance policies with your agents, brokers or directly with your insurer to determine whether your insurance policies adequately cover your potential losses. Download the Insurance Coverage Review Worksheet from Ready.gov to keep track of your insurance policies and know how you are covered at all times.