Small business owners should look at their insurance policies and determine how well covered they’d be in the event of a natural disaster.

Damage from tornadoes and the wind and rains of hurricanes are covered by standard business insurance policies. But some insurers won’t sell policies in coastal areas that are at a high risk for a hurricane. And coverage for flooding, earthquakes and volcanic eruptions is likely to need separate, and often expensive, policies.

Standard business policies are for real property, and don’t cover cars or other vehicles. Owners need to buy business auto insurance, and be sure that it will reimburse for damage from disasters in addition to the standard collision and liability coverage.

The basics of business coverage for natural disasters:


Hurricanes

A standard business policy will cover losses from wind damage like broken windows and roofs that are torn away. And if rain gets inside the building, the damage from the water is also covered. But if the water is due to a flood, entering a building from ground level, that damage isn’t covered. A company will need separate flood insurance, which is regulated by the federal government. It can be expensive for companies that are located in or near flood zones, but businesses can lower their premium costs if they take steps to make their property less vulnerable to flood water.


Tornadoes

Standard business insurance policies cover wind damage and therefore will reimburse for losses from tornadoes. These policies also cover rain and hail, and damage from both.


Earthquakes

Earthquake policies cover a variety of damage from tremors, and each insurer decides what kind of damage they’re willing to cover. Some charge high deductibles, as much as 20%. Earthquake coverage is sold separately from a standard business policy.


Volcanoes

There are 169 volcanoes in the U.S., although major eruptions like last year’s Mount Kilauea lava flow are rare. Most business insurance policies provide coverage for damage caused by a volcanic explosion, shockwaves, ash, dust or lava, according to the Insurance Information Institute.



Source: © The Associate Press

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