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We want to encourage business owners to think about insurance in this way: It’s not about how much it costs but how well you’re covered.

The Greeley Tribune article from November 27^th titled, “At-Risk Environment: Many Companies Don’t Have Disaster Insurance,”¹ reminded us of this thought. This article highlighted a sausage and specialty food store in Denver who shut down after the shop next door caught on fire. The fire didn’t reach the sausages but the smoke and water caused damage to the shop. But the main reason the shop shut down for over a year and lost thousands in potential income? They didn’t have enough insurance coverage.

When disasters affect businesses, an estimated 40 percent of businesses are forced to shut down. 25 percent fail within two years. In fact, in 2012, insurance covered only half of U.S. disaster costs.²

Disasters are devastating and businesses need adequate insurance to get them back on their feet as quickly as possible. Here are 4 tips to consider to help your business from being underinsured.

1) Review Costs on Each Renewal⁴

As your business grows each year, so will the costs to get you back on track.

2) Re-Build Value vs. Market Value⁴

Re-build value takes more costs into consideration versus market value. Market value can come up short in costs when rebuilding.

3) Working from Home⁵

Some home-run businesses only have homeowner’s insurance policies. A homeowner’s policy may only cover a small portion of lost business equipment. It does not cover liability and lost income.

4) Don’t Underestimate Business Interruption⁴

A standard estimate is 12 months but often this is too short a period. You need to take into account business growth and competitor activity.

Business Continuity

To help your business get back on track after a disaster, it is important to have a business continuity plan.

Traveler’s Insurance describes a business continuity plan as, “a proactive plan to avoid and mitigate risks associated with a disruption of operations. It details steps to be taken before, during and after an event to maintain the financial viability of an organization.”⁶

Here Is a 4-step Business Continuity Plan from Traveler’s to Consider for Your Business.⁷

At Union Colony Insurance, we are here to help protect your assets and manage your risk. If you are need of business insurance coverage or want to review your policy for adequate coverage please give us a call.