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10/2/2012 - How businesses can cover all their bases when a storm threatens


Business owners should make a contingency plan.

While Hurricane Isaac impacted a considerable number of businesses, the damage left could have been much worse. Nevertheless, the vulnerability to hurricanes that many businesses along the Gulf Coast face is a stark reminder that they needed to implement better risk management procedures, the Insurance Information Institute recently stated.

As noted by the III, the Gulf Coast - which comprises Texas, Louisiana, Mississippi, Alabama and Florida - is a major trade port for the U.S. A slowdown in commerce that may result from a hurricane has the potential to severely impact not only the businesses that operate in the area but the U.S. economic system.

While no company can predict how severely they will be affected by an impending environmental disaster, the III notes that businessowners insurance can make the recovery period less cumbersome. Several businessowners insurance policies contain business interruption coverage, which provides financial protection for companies forced to close their doors for a period of time. That said, this type of coverage may not be sufficient, as it's typically limited to providing relief for physical damage.

To avoid disruptions to the amount of goods that businesses produce, the III notes that several private insurers offer supply chain insurance, which in addition to providing for issues at the policyholder's place of business, also accounts for incidents that are outside of their control, such as strikes or rioting.

Loretta Worters, vice president of the III, said that business owners need to maintain a steady flow of dialog with their insurer so they can protect businesses in the best way possible when disaster strikes.

"Businesses need to identify key supply chain risks and make sure to convey those risks to their insurer," said Worters. "Sound loss prevention engineering can best help protect the supply chain from property loss, so that insurance becomes a last resort rather than a first line of defense."


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