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12/11/2012 - How a business owner's policy can help managers recover


Business insurance is vital for companies in all industries.

Though the Northeast has seen its share of significant storms, hurricanes have been fairly few and far between in recent years. As a result, many people who have started their own company were adversely affected by Hurricane Sandy may find themselves doing what they had heretofore never done - filing a business owner's insurance claim.

Here are a few things business owners should keep in mind so that they can take full advantage of their investment.

Read the declarations page. Though it may sound simplistic, perhaps the most important things to do is to actually read over the policy itself. The declarations page on a business owner's plan should detail exactly what the insurance package covers. Policies are generally tailored to the entrepreneurs needs, so relying on someone else's is an ill-advised plan of action.

Look for specific coverages. In the course of reading it, business owners should be on the lookout for a few things. For example, before the policy kicks in, a business owner has to pay a certain portion of the claims costs, more commonly known as the deductible. This will inform entrepreneurs about what their share of their expense will be before their policy covers the rest.

They should also check to see that they have flood coverage. As a general rule, flood insurance is separate from a business owner's policy, but when the plan was initially purchased, flood coverage may have been added on.

Accounting for staff may indicate the best way to proceed. Something else business owners may want to establish is what kind of an impact the hurricane had on their staff. Unfortunately, hurricanes like Sandy can cause extreme levels of damage, to the point that an employee may be forced to remain at their home for several days as a result of conditions that prevent them from getting to work. This makes key person insurance especially helpful, which is another option some business owner's policies have.

According to the National Association of Insurance Commissioners, nearly three-quarters of business managers say they rely heavily on at least one person in their companies in order for dealings to function at their best. This type of coverage can reimburse business owners the amount of money that may have been generated had their employee been in place.

Business interruption coverage. In a similar vein, business interruption insurance may be another component that business owners can turn to for assistance. While some storms may be so powerful that it can destroy a property, the damage rendered may be just enough to force a manager to suspend operations for weeks or months. Business interruption insurance can help account for this, as based on financial statements, an insurer can compensate a small or large business owner so that they can still pay their employees. It may also provide for utility payments or an ability to replace lost income.

Ask insurer about claim process length. Depending on how many claims result after a catastrophic weather event, the claims process can take a while. This can be frustrating, as business owners typically want to get things back on the right track as soon as possible. An insurance agent should be able to provide business owners with a rough estimate that explains when they will be compensated or when the repair work can begin.

However, if business owners are particularly handy, or if they know someone who can start the rebuilding process, things may be able to get started before the claims process officially begins. Business owners should consider talking to their agency about whether they can start the repair work themselves. If given the go-ahead, managers should keep track of all of their expenses; the insurer will then provide reimbursement at the appropriate time.

NAIC says that over 90% of small business owners have insurance. Being able to recover after disaster may make it the best investment a company can make.


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