Commercial Insurance and Business Operation Continuation Planning

North Texas was hit by an ice storm about two weeks ago.  Rain fell and froze then built up on trees and powers lines until weight won out and lines began to snap.  The storm led to power loss for over 270,000 people with no numbers reported on the impact to small businesses.

Take a moment and look back over the past two years.  Besides the most recent ice storm in north Texas, we’ve seen a fertilizer plant explode in West, Texas, flooding in San Antonio, Austin, and Colorado; a hurricane hit New York, fires in various parts of California, and a whole lot more.  As a business owner, what do you do when one of these events happens to your community?

As the temperatures fell and power went out, I paused for a few minutes and worked through what I’d do should we lose power.  We didn’t but I did outline three secure backup locations where we could operate if we had to.  The ice may have melted in north Texas, but now is a great time to work through a couple of options and create a business operation continuation plan before the next ice storm, fire, hurricane, or flood arrives.  I also believe there’s an important part of your commercial insurance policy that should be reviewed now.

There are three questions every business owner should answer in order to outline a business operation continuation plan:

  • What do you need to operate your business?
  • What kind of natural disasters are you geographically prone to?
  • How long can you operate without customers?

Every business has certain minimal requirements it needs to open the doors.  It may be electricity, water, natural gas, internet connection, temperature settings, or phone service.  It could also be certain raw materials or supplies.  Are there ways to provide for the needed minimum items of operation?  For instance:

  • Do you have a generator or does the building you lease have a generator to provide electricity?
  • Do you have a secondary provider for internet service, cloud storage, or data processing?
  • What about propane storage if natural gas were cut off?
  • Could your team operate from home using their cell phones?
  • Do you need to keep a supply of certain raw materials if your supplier couldn’t get to you for 3 days?

Identifying alternative solutions becomes easier once you know what you need.  Be sure to review your lease agreement before embarking on any modifications.

The next things to identify are the type of weather or natural disasters that can impact you.  Texas is prone to hurricanes, hail, and tornados.  Ice is not uncommon in north Texas during the winter and heavy snows are common in the pan handle.  In recent years we’ve had flooding and even wild fires.

Determine the level of impact each of these would have on you then look at historical data to determine the probability you may experience one of these weather patterns.  I also recommend knowing if you’re in a flood zone.  It may not be cost effective to have a plan in place for every contingency.

Even if you’ve taken the steps to operate through an ice storm or some other weather incident, your customers may not be able to make it to you.  How long can you operate with no customers?  This may be measured in hours, days, or weeks, but having funds set aside will help bridge that gap.

Having the proper business insurance coverage will help that too.  Most commercial policies have coverage for loss of income due to a claim situation.  Review your policy and compare it to your business operation continuation plan.  Determine what causes the policy to kick in for loss of power, etc.  I know one business owner who lost power due to a hurricane.  They lost power and subsequently thousands of dollars of shrimp due to spoilage.  Their policy would have covered the spoiled shrimp had the power line to their building been disconnected or broken by the winds.  The lines were still attached and the policy didn’t pay for the spoiled shrimp.  Had I been his agent at the time, he would have had coverage to protect him against that.

What thoughts, suggestions, comments, or questions do you have?  Share them, along with how you’ve planned to continue to operate with me.  I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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