Property damage
Hurricanes, snowstorms, floods, fires and other events that damage your business's physical property can throw a serious wrench in your business's ability to operate normally. While your storefront or office may not have been completely destroyed, chances are, you won't be able to run your business out of there while repairs are happening.
"Only 50 percent of small business owners have a written business-continuity plan, according to the Travelers Business Risk Index," said Scott Humphrey, second vice president of risk control at Travelers. "Between severe weather events and the increasing reliance on a complex network of technology and supply chains, the risks of business interruption are plenty."
What to do: Your first line of defense against the negative effects of property theft or damage is insurance coverage. Gibbons noted that some businesses aren't adequately insured to their true values.
"Ask yourself if you have enough coverage to rebuild a business after a total loss," Gibbons said. "Business owners should make sure their building and its contents — including shelving, displays, inventory and any new equipment — are properly insured. Properties should be insured to their full replacement value — not market value — including any recent improvements."
Michael Freed, a business litigation attorney at Gunster law firm, also urged business owners to consider business interruption insurance to keep their cash flow going, even if operations have been halted temporarily.
"Business interruption insurance provides coverage for lost revenues and profits arising from uncontrollable interruptions in business operations, such as those arising from natural disasters or a building fire," Freed said. "When that type of casualty strikes, business owners need not only to rebuild where there has been physical damage, but to offset for missing revenues while they do so. This is particularly critical for businesses with limited capital reserves."
Beyond that, Humphrey advised developing a disaster recovery plan so your business has a protocol to follow should such an interruption occur.