Restoration Contractor Insurance Guides: The Importance of a Disaster Recovery Plan
Restoration contractors, more than almost any other industry, understand the devastating effects a disaster can have on a business. What’s interesting, though, is that many restoration contractors don’t have any type of recovery plan in place in the event they are struck by a large claim or disaster.
It’s in that light that we want to provide some tips to restoration contractors for developing their own disaster recovery plan. That way your contracting company can have the necessary measures in plan to protect your bottom line from any potential disaster. (It’s also worth mentioning right here that even the best disaster recovery plan will never be a good substitute for proper insurance.)
Steps for Developing a Business Recovery Plan
Write out each step of the plan and assign responsibilities to employees in clear and simple language.
Compile a list of important phone numbers and addresses. Make sure you can get in touch with key people after the disaster. The list should include local and state emergency management agencies, major clients, suppliers, realtors, financial institutions, insurance agents and insurance company claim representatives.
Decide on a communications strategy to prevent loss of customers. How will you let your customers know how business operations will be going forward? Post notices outside your premises; contact clients by phone, email or regular mail; place a notice in local newspapers.
Consider the things you may need initially during the emergency. Do you need a back-up source of power? Do you have a back-up communications system?
Employee Safety. Protect employees and customers from injury on the premises. Make sure you have a centralized location for employees to meet at so you can account for them in a disaster.
Business Community. Even if your business escapes a disaster, there is still a risk that it could suffer significant losses due to the inability of suppliers to deliver goods or services or a reduction in customers. Make sure your suppliers know how and where to contact you in a disaster.
Keep Duplicate Records. Back-up computerized data files regularly and store them off-premises. Keep copies of important records and documents in a safe deposit box and make sure they’re up-to-date.
Identify critical business activities and the resources needed to support them. If you cannot afford to shut down your operations, even temporarily, determine what you require to run the business at another location.
Review Your Insurance Plan
Make sure you have sufficient coverage on your insurance policies to not only cover the direct losses to your property and equipment, but to also cover the indirect losses like income, payroll, and other ongoing expenses.
To cover the indirect losses, your insurance policy should have business income and extra expense coverage. In addition to extra expenses, business interruption coverage can also cover interruptions away from your premises, like damage to a key supplier or utility company.
For a restoration contractor we recommend the following property insurance coverages to help ensure a continuation in your company’s operations in the event of a claim:
Building Coverage provides coverage up to the insured value of the building if it is destroyed or damaged by wind/hail, or another covered cause of loss. This policy does not cover damage caused by a flood or storm surge nor does it cover losses due to earth movement, such as a landslide or earthquake, unless added by endorsement.
Business Personal Property provides coverage for contents and business inventory damaged or destroyed by wind/hail, or another covered cause of loss.
Tenants Improvements and Betterments provides coverage for fixtures, alterations, installations, or additions made as part of the building that the insured occupies but does not own, which are acquired and made at the insured’s expense.
Additional Property Coverage provides for items such as fences, pools or awnings at the insured location. Coverage limits vary by type of additional property.
Business Income provides coverage for lost revenue and normal operating expenses if the place of business becomes uninhabitable after a loss during the time repairs are being made.
Extra Expense provides coverage for the extra expenses incurred, such as temporary relocation or leasing of business equipment, to avoid or minimize the suspension of operations during the time that repairs are being completed to the normal place of business.
Ordinance or Law provides coverage to rebuild or repair the building in compliance with the most recent local building codes.
If you have any additional questions in setting up your agency’s disaster continuity plan, please feel free to give our office a call