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How well could your small business withstand the effects of a natural disaster, like a hurricane?

Predictions of an active hurricane season -- researchers now say there is more than a 70 percent chance of one making landfall -- should prompt business owners to take stock of their insurance policies to confirm that their businesses are adequately protected.

“Small business owners know their homes need insurance protection from hurricanes, but they may not realize just how important it can be to have their businesses protected as well. Large businesses typically have business interruption/continuation coverage. This type of insurance is something many small business owners should consider. It could well help a small business survive the aftermath of a natural disaster,” Insurance Superintendent James Wrynn said.

Business interruption/continuation policies cover lost earnings when a business is forced to shut down operations for an extended time. These policies cover expenses associated with a business, like payroll and utility bills. They may also pay for extra expenses incurred to keep a business running in the aftermath of a disaster.

When buying a policy, business owners should consider what perils are listed, what expenses are covered and whether coverage limits are adequate.

Benefits under this type of policy may not be payable for a certain number of days after a business interruption occurs. So, business owners should see if the policy has a waiting period and whether they have sufficient funds to keep the business going during that time.

Two other forms of coverage, civil authority coverage and ingress/egress coverage, could also, in certain cases, provide financial protection, even when a business does not suffer a direct property loss.

Civil authority coverage compensates policyholders whose businesses suffer losses as a consequence of actions by government agencies, such as when there are emergency street closings. With ingress/egress coverage, intervention by civil authorities hasn’t occurred, but disaster conditions make it impossible for employees, customers and others to gain access to a business site.

Both types of coverage are usually available in the form of endorsements to existing business policies. Depending on the policy, there may be waiting periods for coverage to kick in and limits on how long coverage lasts.

Since business coverage can be complicated, the New York State Insurance Department urged business owners to consult with insurance professionals when selecting coverage. They should also take these actions to better prepare themselves for a potential natural disaster:

  • Review property, liability, flood, commercial auto, commercial umbrella and other business insurance policies to make sure they are up-to-date and at levels that protect business assets.
  • Evaluate coverage to see if property will be replaced for actual cash value or replacement cost. Actual cash value reimburses the cost to replace, rebuild or repair damages and takes depreciation into consideration. Replacement cost does not factor in depreciation.

To learn more, visit, a website focusing on insurance issues related to small businesses. The site is sponsored by the National Association of Insurance Commissioners.

Additional information can be found on the Insurance Department’s website,, or by calling the Department’s Consumer Services Bureau from 9 a.m. to 4:30 p.m., Monday through Friday toll-free at 800-342-3736.


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