Business strategy for 2017: Plan for 3-day waiting period for business interruption insurance
During hurricane season, emergency preparedness professionals suggest that people have enough food and water around to last three days. Business owners need to plan for three days on their own, too. But it’s not about food and water; it’s about cash reserves.
One important coverage for a business owner to consider is business interruption insurance. It is triggered due to a slowdown or suspension of a business’s operations due to a covered peril, such as a fire or hurricane. And, it has limitations that must be recognized, with the most important being the typical waiting period of 72 hours before coverage kicks in.
Why is there a waiting period? It exists to lower the cost of insurance coverage and to encourage the business to take necessary, immediate steps to minimize business losses. There are ways to reduce or remove that waiting period, at an additional cost. However, knowing the coverage does not go into effect the moment the lights go out is the first step to planning for it. Many small businesses do not do that. After every natural disaster, they learn about it too late.
Business owners should find insurance coverage that matches their business size, that suits their particular needs, and they must remain confident in their understanding of how a commercial insurance policy works. Now is the time for small-business owners to take a hard look at their risks and make a plan for 2017.
According to the Small Business Administration, 99.7% of all businesses are small. If that sounds surprising, understand the SBA defines “small” as a business with fewer than 500 employees. About 80% of businesses are VERY small, as in under 10 employees. Thinking big is a success strategy as necessary for the sole proprietor as it is for the CEO of a giant corporation. It includes thinking about how to make it through the first 3 days after disaster strikes. With a well-conceived plan, the disaster itself may certainly ruin your day (or month), but it won’t ruin your business.