Commercial Risk & Employee Benefits: Natural Disasters - Before, During & After
Understanding the Issue – Having What You Need When Disaster Strikes
Are you prepared for the next weather disaster?
Ensure you have what you need to support your employees and your business.
This summer, long-term weather experts predict warmer than usual temperatures for much of the country with expectations for one to four major hurricanes to form. And so far, in June alone, 76 tornadoes have struck various parts of the country. Of course, preparation is key not only to surviving a natural disaster, but also for thriving afterwards. The question is…
DOES YOUR BUSINESS HAVE WHAT IT NEEDS WHEN IT NEEDS IT?
It is the duty of an organization to protect their employees while working. In fact, the Occupational Safety and Health Act requires companies to ensure worker and workplace safety – providing a place free from recognized hazards to safety and health. To comply with the regulations, help maintain business continuity, and care for employees, your disaster plans and contingencies should include the following:
Communication trees – Often during disasters, utilities, internet, and cell phone service can be out. So not only is reaching employees in hard-hit areas challenging, but so is re-establishing connectivity for employees located in surrounding areas impacted by the outages.
Make sure files with contact details for all employees are backed up and stored in a safe, easily accessible place so that after a severe weather event you can easily reach out. Confirm your team is ready with alternate solutions to help re-establish lines of communication with employees and customers if power remains out for a period.
Resources to support impacted employees – To empathize with and support your employees impacted by the disaster, confirm resources will be available to facilitate return to work as quickly as possible and resume productivity. Make sure contingencies are in place for:
- Rideshares for those left with storm-damaged cars or disrupted public transportation
- Modified shifts or the ability to swap shifts to accommodate employees facing added challenges and responsibilities after a disaster
- More flexible PTO policies for a period of time following the event
- Mobile hotspots for employees without internet or electricity but who have cell service
Benefits-related information employees may need following a disaster, such as: payroll, 401(k) hardship withdrawals, list of services available through your EAP service provider along with access details, health insurance claims information, employment policies regarding time off, forms and procedures for impacted employees to request available employee assistance funds.
Backups for systems, data, and files onsite, offsite and in the cloud.
Documents you may need to reference if your business experiences storm damage, including insurance policies, claims process information, building plans, receipts for equipment, deeds, real estate plot plans, facilities management details, staff contact information, and disaster recovery plans.
List of resources you can contact if a disaster causes major losses, including:
Federal Emergency Management Agency (FEMA) – that can help with debris removal, infrastructure restoration (roads, bridges, communications, electricity, and other utilities) remediation, and construction.
Small Business Administration (SBA) for long-term, low-interest loans to repair or replace damaged property. Businesses of any size may obtain Business Physical Disaster Loans to repair or replace disaster-damaged business property, including real estate, inventories, supplies, machinery, and equipment.
Comprehensive business insurance that can help pay for the following as a result of a natural disaster:
- Physical damage or loss to your business premises, equipment, furniture, machines, computers, electronics, supplies, inventory, and other business property. In particular, check to make sure that coverage limits are adequate to replace any newly acquired items, like desks, phone systems, carpets, conference room furniture and décor, etc.
- Loss of business income if your property is unusable and you must close or suspend operations while it is being repaired or rebuilt. (Also known as business interruption)
- Extra expenses you incur beyond normal operation costs to keep your business running after the disaster.
- Current replacement cost of lost or damaged business property… instead of actual cash value, which subtracts depreciation from your replacement cost.
- Extra costs of rebuilding a business structure according to updated standards for flood zones and building codes. (Ordinance or law coverage)
- Damage to fleet of company cars, trucks, or delivery vans from a natural disaster. (Commercial vehicle coverage)
- Fire, lightning, and explosions, which are all possible results of summer thunderstorms. (Liability coverage)
- Employees who are injured while working on the job or evacuating to safety while on your premises. (Workers’ compensation)
Flood insurance even if it’s not required. Ninety percent of disasters involve flooding. That’s why experts at the Department of Insurance, Securities and Banking, say it’s important to have it anyway… because flood damage, including from storm surge, is typically not covered under a standard commercial insurance policy.
Loss control services that can help you take preventive measures to protect your business before a disaster ever strikes.
Efficient claim services that can help ensure: 1) a timely response, 2) regular updates on the status of your claim, 3) answers to any questions you have throughout the process, and 4) prompt resolution and recovery.
Of course, having the right insurance and plans in place won’t prevent you and your business from being in the direct path of a natural disaster. But they can certainly provide what you may need to mitigate damages you suffer as a result.
Strategies to Manage the Issue – Safe Storage for Business Documents
Will Your Business Documents Survive a Natural Disaster?
You’ve assembled your disaster planning team, defined roles and responsibilities, taken steps to protect equipment, servers, and electronic data, coordinated call trees, and outlined steps to recover and reestablish operations in the event of a natural disaster. But does your disaster preparedness plan identify key business documents, as well as a safe place to store them?
KEY BUSINESS DOCUMENTS TO CONSIDER IN YOUR PLANNING:
Benefits related documents – payroll, 401(k) hardship withdrawals, list of services available through your EAP service provider along with access/login information, health insurance claims information, employment policies around time off, forms and processes for impacted employees to apply for available employee assistance funds, bank and hsa/fsa information, and employment policies/handbooks.
Business continuity documents – insurance policies and contacts, insurance claims forms, building plans, deeds, survey maps and plot plans, tax returns, documentation for business assets, vendor information, facilities management security codes, server access passwords, staff email, phone numbers, and disaster recovery plans.
Irreplaceable historical documents – certificates, artifacts, relics, antiques, artwork, industry memorabilia, and archives related to your business.
Business library collections – relevant and historical books, publications and documents related to your organization, business, physical building site, city, and/or town.
SELECTING A SAFE STORAGE PLACE FOR KEY DOCUMENTS:
Of course, identifying what to protect is only half the challenge. Finding an optimal place that’s safe, secure, yet easily accessible is also key. Here are a few do’s and don’ts to keep in mind when choosing physical and digital storage sites.
For physical storage
Pick a safe, secure, location that can only be accessed by special password, code, or key.
Select a climate-controlled storage space to avoid excessive humidity. And make sure it’s not susceptible to very cold temperatures since pipes can freeze, burst, and cause significant water damage to stored items.
Monitor humidity levels for both storage areas and server rooms to be within an ideal range of about 40-55% to retard mold growth on stored documents and avoid electrical problems, rust, and corrosion on computer equipment.
Inspect storage space for signs of pest or rodent infestation.
Periodically check warehouse or facility to make sure documents remain safe, secure, and protected from hazards.
Review policies and procedures to gain access to your stored documents after the disaster.
Form a plan to clean and restore documents if, despite all your efforts, damage occurs.
For digital storage
Make sure your benefits administration system is backed up on a regular basis and can be accessed from anywhere.
Prepare digital copies of any personnel records, and other original paper documents. (Natural disasters often bring mud, water, fire, smoke and other hazards that can damage, and make it difficult to access, physical records.)
Scan and store all digital records and employee paperwork in the cloud and keep passwords safe and secure so you can access files after the disaster has passed, if necessary.
Keep an inventory list of all records and files that you have backed up and digitally scanned.
Maintain an offsite backup server as a duplicate just in case your main backup server ends up damaged.
Back up external hard drives with duplicate data on a regular basis.
Change passwords and security codes to access backups if/when members of disaster planning leave or are dismissed from your organization.
Choose a site, including bank vault or storage facility, that’s near your business and in the same potential path of destruction or disaster.
Store files and documents in an attic, basement, or garage, which can be prone to mold, mildew, pest, and rodent infestations.
Pack documents in cardboard boxes or containers. These are susceptible to mold and microbial growth, as well as to moisture and vermin, which can all do damage to documents stored inside.
Schedule inspections in summer only. In certain areas where freezing temperatures occur during winter, pipes can burst and cause water damage.
Put off establishing emergency response procedures for restoring and recovering documents in the event they are damaged while stored.
Determining a Path Forward – Before, During, and After a Natural Disaster: Working with Your Insurance Advisor
Natural disasters are costing U.S. businesses significant downtime and money. According to Entrepreneur, Fortune Global 500 manufacturing and industrial firms alone have lost almost $1 trillion because of them. With the number and severity of natural disasters, (e.g., wildfires, tornados, hurricanes, etc.) increasing every year, disaster preparedness and business continuity planning can be key to cutting the potential for downtime for all types of companies. Fortunately, your insurance advisor can serve as a valuable resource when preparing for, and recovering from, a natural disaster as quickly as possible.
What Your Insurance Advisor Can Do for You:
BEFORE A DISASTER STRIKES
Explain the risk(s) your business may face
With industry and claims data at their fingertips, insurance advisors can share insightful information about:
- What potential disasters threaten businesses in your area.
- Possible ways you can be impacted by losses.
- How much you may have to pay to restore property or repair damages from a natural disaster.
Share practical tips from loss control teams
These can be extremely helpful for pinpointing potential exposures you may not be aware of and help you take precautionary steps to minimize possible and costly losses. For example, your insurance broker can help you get a wind and flood mitigation inspection as part of your overall plan.
Review your insurance program
Are you confident your property values are up to date? Do you know if your insurance policies have loss-reporting provisions and waiting periods before coverage starts? Your advisor can help make sure you have the comprehensive protection you need, including:
- Sufficient property coverage to pay to repair your buildings or property, replace equipment and business assets, and compensate you for lost business income.
- Business income coverage that can compensate you if power or utility outages impact your operation. (BI coverage is triggered only if damage occurs at the insured’s property and does not typically cover lost income if your business shuts down due to flooding.)
- No gaps in protection due to recent changes in coverage limits and exclusions that can leave your business more vulnerable to risk.
- Specific add-ons or options designed to protect your unique business exposures.
Examine your disaster recovery plan. (Or help you establish one.)
Your advisor can help you prepare your business for a natural disaster and discuss what resources you will need in case the unthinkable happens.
Remind you to check your security system and/or services.
This will ensure your property, equipment, and other business assets are as secure as possible before, during, and after the storm or disaster hits.
DURING THE DISASTER
Monitor the situation.
Your advisor can update you on action plans and resources they can marshal to help you as quickly as possible after the disaster.
PROVIDE IMPORTANT BENEFITS INFORMATION.
Your advisor can help provide you with your key employee benefits resources for distribution to employees during a disaster.
AFTER THE DISASTER
Assess damage and losses.
Your advisor can help you compile the necessary documents you will need to give insurance adjusters to prove the extent of the damages caused by the disaster, including:
- photos and videos of your property before and after the disaster occurred
- repair estimates
- inventory records
- necessary receipts
File a claim quickly.
And provide the information you need to get adjusters out to your business to inspect damages.
Navigate the claim process.
In the event of an extensive damage, the claim process can be long. Your insurance advisor can help communicate with your insurer on your behalf, expedite your claim, if necessary, and advocate for your best interests.
Refer you to approved, reputable vendors.
This can help you access supplies and facilitate repairs to recover and restore operations.
Your Advisor can share best practices, including:
- Use list of approved vendors to repair, replace, or restore damaged business property or assets.
- Get proof of insurance and contractors’ license numbers so you can check their status with the licensing board.
- Check online reviews, references from former customers, and your local Better Business Bureau.
- Get more than one estimate.
- Pay by check or with a credit card.
Support employees with needed benefits information.
This includes being ready with the details that your employees will need to access benefits information, such as: EAP provider and access details, medical insurance claims procedures, hardship withdrawals and guidelines from retirement plans, etc.
Review your disaster recovery plan.
It’s important to see what worked, what didn’t, and what improvements your team can make to be even more prepared the next time a natural disaster hits.
With today’s elevated risk for natural disasters to occur everywhere, it’s crucial for businesses to take steps that can help mitigate damage and reduce downtime. Contact us to learn more about how we can help you.
This material has been prepared for informational purposes only. BRP Group, Inc. and its affiliates, do not provide tax, legal or accounting advice. Please consult with your own tax, legal or accounting professionals before engaging in any transaction.