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3 things to know about business interruption insurance


It's impossible for a company to be prepared for every possible threat out there, but having small business insurance is one way to get slightly closer.

Aside from internal risks such as professional liability, other external threats such as natural disasters and terrorism can have severely disrupting effects on the ability of a business to continue its operations. In many cases, disasters can be so damaging that some affected businesses may not even recover and open their doors again.  While general business insurance coverage is essential for protection against risks associated directly with company operations, it's important to consider external factors, as well. 

"Disaster and business interruption insurance is also becoming a must for business owners concerned about damage or a prolonged shutdown resulting from natural disasters, incidents such as a toxic spill or transportation disruption, or acts of terrorism," stated an opinion piece for Staten Island Advance.

But naturally, not every business faces equal threats. Here are some basic issues to keep in mind when planning for the right business interruption and disaster recovery plan:

Are you over-insured?
While disaster recovery insurance can easily cover business-related damage due to unpredictable external factors, it's still possible to be over-insured. But for business that have a substantial amount of value invested in their locations, a disaster recovery insurance plan should be treated with as much importance as basic homeowner's insurance. Just be sure that it relates directly to the unique risks of the business operation.

Is your policy up to date?
Many aspects of a small business change on a yearly basis. Some companies may move to new locations or they may add to their existing locations. As such, the general risk factors change with each adjustment.

According to the Insurance Information Institute, businesses should conduct regular reviews of their insurance policies in order to account for changes.

Are you taking additional measures?
Aside from a solid insurance plan, there are several other steps businesses can take to prevent damages to their operations in the event of an external disaster.

Business Spectator highlighted the benefits of cloud computing and data storage as a safeguard against interruptions. The ability to work freely from any location can work to a company's advantage when the physical office is inaccessible.

However, switching to cloud-based storage comes with risks of its own. Businesses need to make sure their data is always secured behind strong passwords or encryption systems. A business' overall insurance plan can also include coverage for damages resulting from data breaches and theft.

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