Insurance and Disaster

Natural disasters are a force that cannot be reckoned with. They leave a large trail of damage that is even impossible to recover from. This is why it is important to know how an insurance cover can be of help if such a situation might occur.

Each natural disaster reminds us of the value of insurance to protect our homes and businesses. But with the news filled with stories about homeowners still waiting to settle claims, or insurance covering less damage than expected, what is the role of private insurance in disaster recovery?

One of the underlying issues is the rise of natural disasters over the past decade. Insured losses from U.S. tornadoes and thunderstorms—the most costly of weather events — topped $25 billion in 2011, more than double the previous record of 2010, according to the industry trade group the Insurance Information Institute.

Tornadoes were the costliest type of natural disaster in 2011 based on insured losses, far outpacing hurricanes, which resulted in insured losses of $5.5 billion, according to the Insurance Information Institute.

Sourced from:

For one to be able to recover after a natural disaster, they should have a well laid out insurance program. There are certain provisions that should not be left out for instance business income insurance and employee payroll.

Business Income Insurance – Property Insurance will help you rebuild your damaged property, but it will not protect the lifeblood of your organization. In the event of a disaster, how will you replace the cash flow from your discontinued operations? In addition, many expenses, such as mortgage payments and real estate taxes, will continue even after a disaster. Business Income insurance can be used to fund the income that is lost and the expenses that continue after the disaster. Completing a business income worksheet with your insurance broker is an essential component of a disaster recovery plan, and for pennies on the dollar provides a cost-effective way to fund this exposure.

Payroll for Your Employees – If your operations are temporarily shut down, how will you continue to fund the payroll for your employees? Do your employees have a specialized skill that makes them difficult to replace, or is it costly to retrain new employees? Retaining your employees may be a key component of your disaster recovery plan, and a well-designed insurance program can be used to pay this expense.

Sourced from:

You should do things step by step. A short term plan can eventually evolve into a long term solution. So take time and work with insurance providers to come up with a disaster recovery plan. Have it is tested out so that in case of a disaster, you are well prepared. The tips are;

Draft an emergency response checklist

An emergency response checklist should detail who in the firm should be notified following the disaster and the measures that should be taken to minimise the effects (for example, turning the water off at the stop tap following a burst pipe).

If you have employees, ensure they have a copy of the plan and consider running drills annually for staff to familiarise themselves with their roles. Also include contact details for all employees and key suppliers.

Regularly backup data


Every firm has different types of data, but almost all hold some form of confidential customer data or business critical project. Take a look at your current backup procedures and consider implementing both online and offline solutions that will keep your business running if a virus were to wipe out your primary storage device. Regardless of the solution you choose, ensure backups are carried out on a regular basis (at least once a day) and can be accessed away from your usual place of work.

Sourced from: