A Matter of Survival

AS EVIDENCED IN RECENT NEWS headlines, natural and even man-made disasters can strike instantaneously. However, their disruption of lives and livelihoods do not vanish quickly. How long can a business sustain such a disruption?

To ensure their livelihood, waste companies need to resume operations quickly. Following a disaster, a company may find that many day-to-day tasks can be accomplished relatively easily, but others are hindered. For instance, a recycling facility that has an extended close-down while the premises are being repaired may lose some of its customers. Loss or damage to equipment may prevent a waste company from providing its services for a period of time.

To keep business going, contingent plans may need to be implemented and unexpected expenses may be incurred. In many respects, having appropriate insurance can ensure business survival.

Business interruption insurance, which has gained more attention in recent years, helps to assure that a business can be financially sustained should an event sideline operations. Typically, businesses do not purchase separate business interruption policies, but instead add such coverage to their property insurance policy or other comprehensive insurance programs — such as an environmental insurance policy.

When choosing policies, a company should check on the business interruption coverages offered under its current insurance policies. Likewise, a company needs to understand the various kinds of business interruption coverages and the circumstances under which they offer protection. A business also needs to evaluate its potential risk for interruptions.

There are various types of business interruption coverage available, including protection related to:

Business Income: This coverage is designed to replace income that would have been earned had the business not suffered from a disruption.

Extra Expense: This protection is designed to pay for the additional but necessary expenses required for the business to operate as it restores its property. These expenses could include relocating to a temporary site to resume normal operations.

Contingent Business Interruption: This is an extension of coverage designed for a business' loss of income incurred as a result of a property loss suffered by a key supplier or customer.

Civil Authority: This coverage may be available for loss of business income and extra expense sustained as a result of government denial of access to a business' property.

Recent news stories offer a quick reminder of how vulnerable any business can be. Businesses of all sizes have the need and opportunity to create comprehensive continuity programs to protect their physical and financial assets, as well as their employees. It is essential for companies to evaluate and re-evaluate their vulnerabilities to an interruption and to establish a plan to keep disruption to a minimum.
Kate McGinn XL Specialty Insurance Co.Exton, Pa. www.xlinsurance.com