100th Anniversary of Triangle Shirtwaist Fire a Reminder That Businesses Should Have a Disaster Plan In Place
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NEW YORK, March 25, 2011— The tragic Triangle Shirtwaist Fire, which occurred a century ago today, is a reminder to all businesses of the need to be prepared for a disaster. In addition to typical risks such as fire, there are a host of other risks that are unique to each particular type of business. So it is essential that business owners have a disaster plan in place, which includes buying the right type and amount of insurance. Business owners should also update their policies annually to include improvements, major purchases and increased rebuilding costs, according to the Insurance Information Institute (I.I.I.).
Do You Have a Disaster Plan In Place?
- Write out each step of the plan and assign responsibilities to employees in clear and simple language. Practice the procedures set out in the emergency response plan with regular, scheduled drills.
- Compile a list of important phone numbers and addresses. Make sure you can get in touch with key people after the disaster. The list should include local and state emergency management agencies, major clients, contractors, suppliers, realtors, financial institutions, insurance agents and insurance company claim representatives.
- Decide on a communications strategy to prevent loss of customers. Post notices outside your premises; contact clients by phone, email or regular mail; place a notice in local newspapers.
- Consider the things you may need during the emergency. Do you have a back-up source of power? A back-up communications system?
- Human resources. Protect employees and customers from injury on the premises. Consider the possible impact a disaster will have on your employees’ ability to return to work and how customers can return to your shop or receive goods or services.
- Physical resources. Inspect the physical plant(s) and assess the impact a disaster would have on the facilities. Make sure your plans conform to local building code requirements.
- Business community. Even if your business escapes a disaster, there is still a risk of suffering significant losses due to the inability of suppliers to deliver goods or services or a reduction in customers. Businesses should communicate with their suppliers and markets (especially if they are selling to a business as a supplier) about their disaster preparedness and recovery plans, so that everyone is prepared.
- Protect your building. If you own the structure that houses your business, integrate disaster protection for the building as well as the contents into your plan. Consider the financial impact if your business shuts down as a result of a disaster. What would be the impact for a day, a week or an entire revenue period?
- Keep duplicate records. Back up computerized data files regularly and store them off-premises. Keep copies of important records and documents in a safe deposit box and make sure they are up-to-date.
- Identify critical business activities and the resources needed to support them. If you cannot afford to shut down your operations, even temporarily, determine what you will require to run the business at another location.
- Find alternative facilities, equipment and supplies, and locate qualified contractors. Consider a reciprocity agreement with another business. Try to get an advance commitment from at least one contractor to respond to your needs.
- Protect computer systems and data. There are many data storage and cloud computing firms that offer offsite backups of computer data.
Review Your Insurance Plan
- Furniture and fixtures
- Machinery and equipment
- Stock (i.e., merchandise held in storage, including raw materials, work in-progress and finished goods)
- All other personal property owned by you and used in your business
- Labor, materials and services furnished or arranged by you on the personal property of others
- If a tenant, the improvements or betterments you have made
- Leased personal property that you have a contractual responsibility to insure
- Business income coverage: Compensates you for lost income if your company has to vacate its premises due to disaster related damage that is covered under your property insurance policy. Business income insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, such as electricity, that continue even though business activities have come to a temporary halt.
Review your annual financial records with your accountant to determine your annual net profit (total revenue minus total expenses). You should also have an approximate idea of how much profit you make (and would therefore lose) during a typical year. Purchase enough business income coverage to protect at least this amount of revenue.)
- Extra income coverage: Reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period.
In order to calculate how much extra expense coverage you will need, an appraisal of your office building or any other operating locations should be made as well as a detailed inventory, not only of your product stock but also of your existing office equipment.
- Contingent business interruption insurance: Protects a business owner’s earnings following physical loss or damage to the property of the insured’s suppliers or customers (as opposed to the business owner’s own property). Companies today are heavily dependent on raw materials from key suppliers to make the products they sell. What happens if the supplier suffers a loss and cannot continue to deliver the product?
Make sure to determine how much revenue would be lost if you were unable to receive your product from your main supplier or if your main customers were unable to buy from you.
- Ordinance or Law: Provides coverage to rebuild or repair any buildings occupied by the business in compliance with the most recent local building codes.
THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.
Insurance Information Institute, 110 William Street, New York, NY 10038, (212) 346-5500