CHAPTER 11Insurance Coverage

Many businesses have a love-hate relationship with insurance. We love the security it provides but hate the cost. We know we have to have it, yet hope we never have to use it. It’s the proverbial Catch-22 . . . we can’t live with the risk, but we also can’t live with insurance costs.

Then there’s trying to figure out all of the technical (and typically confusing) insurance-related terminology, exclusions, and exceptions to the exclusions. Even after reading every page of an insurance policy, most of us aren’t exactly certain of the coverage we’re getting. But we are certain of the cost.

That being said, one of biggest issues organizations deal with after a disaster is cash flow, especially when recovery includes cleaning up damaged areas, making repairs, and replacing equipment. All of these things cost money. Worse yet, they cost money at the same time that your revenue stream is diminished, if not completely stopped.

Then there are the fixed costs that still need to be paid on a regular basis. For instance, your landlord doesn’t want to wait to receive rent, your bank still wants its loan payment, and employees still want their fairly earned dues. So what are you to do?

PREDISASTER FINANCIAL PLANNING

The best thing you can do for your company is preplan for the cash flow crunch that typically comes with a disaster. Depending on your circumstances, this may involve arranging for a line of credit, self-insuring, or obtaining commercial insurance ...

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