Getting Back to Business After a Closure
Following a disaster, it is anything but "business as usual" for you, your employees and customers. But the faster you can return your business to some level of normal operations, the quicker you can restore income, jobs, and goods and services.
Report the Loss Immediately
Call your insurance agent, broker or insurance company immediately to report how, when and where the loss or damage occurred. Make sure you have your policy number handy and give a general description of damages.
Put Safety First
The safety of people and property are key considerations following a disaster. Buildings must be safe for occupancy before employees and customers reenter.
- If you own the building your business occupies, have it inspected by structural engineers and contractors to determine its safety and the extent of the damage.
- If you do not own the building, work with the owner to have the building inspected. Remember, whether or not you own the property, you are responsible for the safety of your employees, and possibly your customers and anyone else who may be on the premises.
- If the building is not usable, you will need to find an alternative location to conduct your business.
- Restoring utilities, phone service, gas lines and other important links should be done as soon as possible. If you discover gas leaks or live wires, contact your utility provider immediately.
- Get your sprinkler system back into service as quickly as possible.
Make note of the damages caused to the structure, including roofing, siding, windows and signage. Be sure to also note damages to business equipment and property, including product inventory and raw materials. Photos and videotapes can supplement your documentation.
To help you keep your staff, suppliers, customers and property safe, you may want to take the following steps.
- Avoid additional property damage by making temporary repairs to the building, such as boarding up windows or covering holes in the roof to make it weather-tight. If you don't own the building, let the owner know about your temporary plans.
- Partition the building if some areas are not usable. If you need to secure the building from casual entry, post temporary signs that redirect parking or traffic access.
- Notify your customers and suppliers about the temporary changes you're making to keep operations going, especially if there is a change of address.
After you receive authorization from authorities and your adjuster, remove all debris as soon as possible. Your insurance company may instruct you to hire a professional cleaning service for your place of business. Any cleanup effort should be done in a safe and healthful manner. If you or your employees are involved in this effort, use safety items such as proper eyewear, gloves, hardhats and dust masks/respirators during cleaning.
During this time, you will also want to:
- Separate damaged stock from undamaged stock
- Ensure all sanitation systems within the facility are working; if not in working order, repair immediately
- Inspect oven hoods and other ventilation devices to ensure they are not clogged and are working efficiently (if the workspace has a kitchen)
- Discard perishable food items and keep a list (if the business is a food service)
Evaluate Business Interruption
Business interruption insurance helps replace the income your business would have generated if it hadn't been temporarily shut down by the disaster. If your coverage includes a business interruption clause, prepare a list of steps required for your business to promptly resume operations on a full or even partial basis. Financial considerations should include payroll, as well as debt needs and obligations.
To help you calculate the amount of business income losses, your adjuster will need:
- Historical sales records
- Income and expense information as shown in recent profit and loss statements and/or income tax forms
- Other business records that might assist in projecting what your profits would have been if your business had not been interrupted—you may need to look to outside resources for these materials if your paper and computer files were damaged or destroyed
You'll also want to maintain accurate records of extra expenses made to expedite the resumption of operations.
- Keep records of communications regarding orders to evacuate, including who ordered the evacuation and the date and time.
- If portions of your inventory are lost or damaged beyond recognition, you'll need records to evaluate your loss, such as receipts.
- If records are also lost or damaged, you will want to look at outside documentation available from your accountant, your insurance agent or the IRS.
- Document any shipments received or sales made after the disaster separately from pre-disaster business.
If you have extra expense coverage, you could be reimbursed for extra expenses such as continuing operations at another location, temporarily renting equipment until damaged equipment can be replaced, moving expenses, etc.
Return to Business
The time it takes to return your business to normal operating levels depends greatly on the decisions you and your insurance representative make together. Key decisions may involve these considerations:
- Overall damage assessment
- Repairs to current location while conducting business
- Amount of modifications to current or new location
- Reordering inventory, supplies and other materials
- Communications with customers, suppliers and employees
- Insurance coverage review
Below are some frequently asked questions of insurance representatives following disasters. You may want to have this list handy when you first make contact with your insurer to avoid multiple follow-up calls:
- What coverage do I presently have?
- Should I make temporary repairs and begin the cleanup process?
- Who will be my adjuster and when will I be contacted?
- Should I begin the inventory process and what is needed in terms of verification for my claim?
- If I do not have any property damage but have lost revenue, can I claim that?
- I had to close my business due to the orders of civil authorities, can I make a claim for the revenue I lost during this time?
Establish a Disaster Preparedness Plan for the Future
Emergencies can be natural or man-made disasters. You will have a better chance of minimizing employee deaths, injuries and illnesses, reducing property damage, and accelerating business recovery if you plan ahead. At a minimum, an emergency preparedness plan should include the following elements:
- Pre-disaster actions to protect people, facilities and contents
- Emergency evacuation procedures and assignments
- Essential facility operations (or shutdown) procedures
- Off-site storage (backup) of information
Discuss your emergency plan with your employees and provide training and periodic testing of the plan. Employees should be notified any time changes are made to the plan, and a current copy of the plan should be kept where employees can easily refer to it.
Home Office: 717 Mullberry St. | Des Moines, IA 50309 | 800-447-2295 | www.emcins.com
Disclaimer: This material is designed and intended for general information purposes only, and is not intended, nor shall be construed or relied upon, as specific legal advice.
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