Insurance is one of the smartest investments a business can make. It is impossible to predict the future, but leaving ourselves unguarded against the unknown is a risk that many businesses cannot afford to take. In particular, businesses that are up and running all hours of the week depend on a disaster plan to help mitigate obstacles. As beneficial as business interruption insurance may be, it is simply a waste of money if it is not kept up to date.
Purchasing business interruption insurance is customary for those who are at a high risk of loss if anything were to stop production. This type of insurance covers a period of downtime resulting from a natural disaster, providing a safety net for those businesses that cannot afford a standstill. However, many owners fail to realize that this type of insurance is incumbent on the insured. This means that the individual buying the policy is solely responsible for ensuring that all documents represent the most current information.
Initially placing business owners in charge of maintaining the insurance policy may seem like a good idea, but unfortunately, it is all too easy to tire of the paperwork. It becomes easy to duplicate the previous year’s paperwork, believing that little has changed. This poor habit obscures the fact that your business expenses and probabilities of expenses have changed, and the insurance is not going to cover the damage that is not listed on the paperwork. Not only are you not covered fully in the event of a disaster, but you are charged extra as a penalty for not having submitted the correct insurance amount. It may make more sense to assign a member of your staff or accounting firm that handles your finances to thoroughly complete this paperwork.
If you have gone through the process of purchasing insurance, it is in your best interests to make certain that the paperwork is properly filled out. Otherwise, it is a waste of money. It is comparable to buying car insurance with a $2,000 deductible when you only have $500 in your bank account. There is little point to insurance if you are lacking full coverage.
Your disaster plan should incorporate aspects of insurance that do more than cover the downtime. You will also need funds to deal with the emergency work that will be necessary to restore your business to a fully-operational status. It is essential that the paperwork is completed diligently each year. Otherwise you might realize too late that your coverage is not as good as you thought it was. Take a close look at your disaster plan today, and make sure that it is up to par.