Tips for protecting your business in case of disaster

More than 500 businesses were destroyed or substantially damaged last May after an EF-5 tornado left a 10-mile-long path of ruin in Joplin, Mo. Most were prepared for typical Midwest storm damage, but not for a tornado of that magnitude, says Rob O'Brian, president of the Joplin Area Chamber of Commerce.

"I don't think anyone can adequately prepare for an EF-5 tornado ... not only with such high wind speeds but also the length and breadth of a tornado like this," he says. Still, the business community has rebuilt quickly and remained optimistic. Nine months later, about 85 percent of those businesses are open and operating, with less than 10 percent not open at all, for various reasons.

"Most are single or family ownership and decided that they didn't want to go through the rebuilding process because they were relatively close to retirement, or didn't have future family members that could take the business over anyway," says O'Brian.

Joplin businesses also learned a few things about disaster preparedness. O'Brian and Nathan Brown, insurance producer at W.E. Walker-Lakenan, LLC in Jackson, spoke with Business Today about how to be ready for a similar event, so that a flood, fire or tornado doesn't have to mean disaster for your business.

__1. Know what's covered by your insurance, and add more coverage if necessary.__ "There are different types of coverage and policies, and you can't reasonably assume that each of several different 'perils' will be covered, whether it be fire, wind, hail, flood, tornado, earthquake or theft," says Brown.

It's crucial to not only read your insurance policy, but to sit down with your agent to review what's covered, how it works and what happens if your lose your business to disaster. And, it has to be in writing, says Brown. If an item is not in print and you want it there, meet with you agent immediately to add it to the policy.

"I can tell you that you have coverage, but if the policy itself doesn't have it -- that's the final authority," says Brown. "One way or another, it needs to be in written form, and you have to properly line everything out with your insurance agent. Make sure you have the proper coverages in place. So many are not just automatically included in every policy. Not all policies are created equal."

__2. Be proactive.__ Unlike other parts of the country, Southeast Missouri deals with ice, fire, snow, high winds, hail, and even earthquakes and hurricanes (remember the big "inland hurricane" in May 2009?). If you have exposed wiring, a damaged roof or a smoke detector with dead batteries, you're setting yourself up for damage claims that could be avoided.

Risk management and loss control are a big part of an insurance agent's job, says Brown. He and the insurance companies he works with can help assess the risk of what could happen at your business and make changes to avoid claims, as opposed to simply reacting after something happens.

__3. Back up your information -- way up.__ If you have company data backed up at home or your accountant's office, it might not be enough in the event of a massive tornado or flood.

"If your house and accountant's office are gone, that backup information is gone as well," says O'Brian. Since the Joplin tornado, some businesses have begun off-site electronic backup, storing information in underground locations or far enough away that it would not be in the same storm path. The Small Business Administration, which provides disaster recovery loans, advises storing files in a portable lockbox office at least 500 miles from your office.

Safe deposits are a good idea, too, says O'Brian: "Even at the bank branches that were hit and destroyed (in Joplin), the vaults were still standing there and intact, so that's a good testament that safe deposit boxes really are safe, even for a storm of this magnitude."

__4. Call on the Small Business Administration.__ The SBA is your best recovery resource, says O'Brian, as it offers long-term, low-interest, fixed-rate loans for your physical plant lost, as well as equipment and economic impact. The SBA also offers loans to residents -- in other words, you and your employees -- who have been affected by a storm and need housing, housing loans and personal property loans.

"Even if you don't think you need it ... apply anyway," says O'Brian. "Take the opportunity to see if you qualify, because you may go a year down the road and find out it costs more to build back than you anticipated, or the equipment is more expensive than you anticipated. If you never need it, that's OK. There is no penalty in being approved, but it's a nice safety net."

The only trick is remembering to apply during SBA's "window of disaster declaration," says O'Brian; once that time is over, you cannot apply for a loan.

__5. Update your policy as needed.__ Have you added to or upgraded your business equipment lately? Make sure you have adequate personal property coverage for it, says O'Brian.

__6. Flood insurance is different.__ Flood is not a normally covered peril under insurance, says Brown. Instead, it goes through the National Flood Insurance Program operated by the federal government. Your insurance agent can help you get flood insurance, says Brown, but it has to be done separately from your regular policy.

"It's its own individual animal," he says. "That's why so many people depend on FEMA. If people have not purchased separate flood insurance, they do not have flood coverage. FEMA can take care of some things, but not to the extent that a flood policy would do for you."

__7. Prepare for the aftermath, too.__ Disaster can be catastrophic on the day-to-day business side, says Brown. That's where business income, loss of use, extra expense or business continuation insurance comes in.

"The insurance company essentially pays for lost revenue while getting the business back on its feet, whether it takes a couple of weeks to get into a temporary location or six months to literally rebuild, and not operate at all until you rebuild," says O'Brian.

In Southeast Missouri, ice storms pummeled the region in 2008 and 2009, leaving many businesses without electricity and unable to operate for weeks. Even in disaster, businesses have to run payroll and pay the mortgage, says Brown, and this type of insurance can help keep the place running.

__8. Check on people, do damage control, then call your insurance agent.__ If your business is hit by disaster, you're probably going to panic, lose sleep and make a lot of middle-of-the-night phone calls -- and that's understandable, says Brown. But first, make sure everybody's OK.

"If something happens, make sure that the people themselves are taken care of. Property can be rebuilt, income can be brought back in another time, business can go on, but first and foremost, make sure people are taken care of," says Brown. Your next step is to make sure nothing worse can come from the situation. If a storm tore a hole in your roof, for example, patch or cover it before the rain does even more damage. Then, call your insurance agent for direction, says Brown.