“Have a plan to protect your business from flooding or other disasters.”
Graphics retrieved from IBHS’ PowerPoint presentation at Tulsa Partners’ Make a Plan Workshop in 2013.
This is what we share as a one of the key messages from the City of Tulsa Program for Public Information. And we usually tell people to check their insurance coverage, especially their business interruption insurance. But what if that business interruption insurance does not apply when you flood?
Dave Hall, Chair of the Disaster Resistant Business Council (DRBC) and Vice President of the Board of Directors for Tulsa Partners, was recently doing research on business disaster losses and business interruption insurance, particularly small businesses. For those who may not know, business interruption insurance covers the loss of income that a business suffers after a disaster. He discovered something that led to discussion by the DRBC, the City of Tulsa Program for Public Information Committee, and other partners.
What did Dave find out?
New Orleans, Louisiana 2005. Graphics retrieved from NOAA Photo Library, National Weather Service Collection, Lieut. Commander Mike Moran, NOAA Corps, NMAO/AOC.
1. Business Interruption is included with your Business Owners Policy as a Contingent coverage (there must be a covered loss for this coverage to apply);
2. Floods are excluded as a covered loss;
3. FEMA offers Flood policies through the National Flood Insurance Program; BUT
4. Flood policies exclude Business Interruption.
So, even if you have flood insurance, you do not have business interruption insurance either through your Business Owners Policy or your flood insurance policy.
The only insurance option available to fill this hole in coverage is something called a Difference In Condition policy, which is not offered as part of, or in addition to, the standard Business Owners Policy. As a non-standard policy, it is written and priced differently by various companies. Since this is coverage that insurance companies either don’t provide, or specifically exclude due to risk, it is typically an expensive option, and probably out of reach of many small businesses.
What to do?
First, do you own due diligence by checking with your insurance provider about your Business Owners coverage. If your small business is in a flood-prone area and you are unable to get business interruption coverage, it is even more important that you take proactive measures to ensure that your business operations continue after a flood.
One resource that we recommend to assist with your business continuity planning is the Insurance Institute for Business and Home Safety’s Open for Business-EZ Toolkit. You will find a variety of tools and information at this webpage.
Stay with us in the coming months as we look at this important topic. In our October newsletter we will have information on business continuity workshops we are doing in Louisiana with the Lowlander Center and WaterWorks LA, as well as a questionnaire to help us offer you future workshops that meet your needs. Our monthly key message in November will go into more detail about the need to have a plan to protect your business.
To learn more about Tulsa Partners’ Disaster Resistant Business Council, click here.