Hurricane season is well underway, as any business on the Atlantic or Gulf Coast knows. The federal government requires businesses in flood-prone areas to secure flood insurance, but these policies have limitations. For example, these policies will pay up to $500,000 for the building and $500,000 for its contents and personal property. Although that coverage may be more than sufficient to address hurricane flood damage, it does not account for lost wages while waiting for contractors to finish the repairs, mold abatement, and so on.

Why Businesses Need a Continuity Plan

The Federal Emergency Management Agency (FEMA) is all too familiar with the devastating effects of hurricanes. According to their data, 40% of small and medium-sized businesses (SMBs) can’t recover following a natural disaster and never reopen. Even if they manage to resume business operations, 25% of them close within a year. The harsh reality is that 65% of SMBs fold within 12 months following a disaster such as a hurricane. Without a business continuity plan (BCP), 75% of businesses fail within three years of a natural disaster.

Developing a Business Continuity Plan

Successful preparation ahead of a hurricane requires businesses to identify and implement mitigation steps for critical aspects of continuity. These include plans for

  • Staff. A BCP should include crisis communication plans for all employees, hurricane awareness training, a plan for sheltering in place and evacuating, putting together emergency supply kits, and holding drills for both scenarios.
  • Surroundings. Exterior structures can wreak havoc on company property. Reinforcing or removing signs and flagpoles ahead of a storm can prevent them from becoming flying projectiles. Similarly, businesses should consult an expert on tree resiliency and fence stability to ensure their landscape can withstand hurricane-level winds. Performing floodproofing where possible can also reduce the likelihood of flood damage, as can creating floodwalls.
  • Space. Safeguarding business-critical property is essential for BCPs. For example, relocating computers, servers, and other contents at least one foot above flood elevation and securing chemicals and other hazardous materials.
  • Systems. Businesses rely on numerous systems for day-to-day operations, such as mechanical, electrical, water, sewer, and more. A professional engineer can provide insight as to whether these systems can withstand a hurricane.
  • Structure. Strong winds, flying debris, and flood waters can also cause significant damage to the building structure. Businesses can take steps to mitigate structural risks. Some examples include bolting the structure to the foundation, maintaining or upgrading to hurricane-rated roofing material, upgrading windows and skylights with impact-resistant glass, etc.
  • Service. Contacting local emergency management authorities can help businesses coordinate their emergency plans during a natural disaster. It also helps businesses identify local resources available to them.

Another essential element of any BCP is investing in the right insurance policy. Business interruption insurance can help businesses manage the cost of wages, lost income, and other operation expenses if a hurricane or other natural disaster renders the property temporarily inoperable. Contact Windermere Insurance Group to identify coverage limits and address any gaps you may have in your policies.