Could you survive a disaster?
It may surprise you to learn that over 40% of companies who suffer a serious fire loss never trade again, so how well prepared is your business to survive a similar disaster?
All businesses operating from premises are susceptible to a disaster, which may be totally beyond your control. Your business could be affected by a serious loss without adequate Business Interruption insurance and other risk management initiatives, the very future survival of your business could be at stake.
Whilst most businesses purchase Business Interruption insurance, it is essential that this is adequate to ensure full recovery. You should ask yourself the following questions:-
1. Is your sum insured adequate?
Do not assess your cover on your current level of trading, but project forward for at least two years to allow for any future anticipated expansion of the business.
2. How adequate is the length of your indemnity period?
Most businesses purchase a 12 month indemnity period, but would this be adequate to enable the business to successfully continue to trade at the same level as prior to the loss? Most businesses tend to be optimistic about the length of time it would take them to recover from a disaster. You need to consider how long it would take to rebuild your premises? How long will it take to replace your key machinery ? Will you lose your customers to your competitors if you cannot supply them? How long will it take for them to reuse you once you have recommenced trading
3. How dependent are you upon your major customers or suppliers?
What if your major supplier had a serious fire and was no longer able to supply you? Could you source from elsewhere but if so, would this be at an additional cost ? What if your largest customer suffered a major fire and confirmed that they no longer required your goods or services?
4. Do you have a workable and up to date Disaster Recovery Plan in place?
Another surprising fact is that within 18 months of suffering a major disruption, 90% of businesses without a plan in place no longer exist. Ensure that you have a contingency plan in place, to enable you to continue to run the business during and in the aftermath of the incident.
Business Interruption insurance can be complex by nature, but your Insurance Broker will assist you to ensure that you have the correct basis of cover in place. You may then be one of the lucky 60% who could survive a serious fire!
