Being prepared for an earthquake is a good investment if you are in a quake-prone area. At least one-fourth of all businesses that close because of a disaster never reopen, mostly because they are unprepared.
“Is Your Business Ready” questionnaires are a great place to start to help you determine how you might respond in case of a major earthquake (you’ll find the quiz below).
Once you know the results of the questionnaire, you can start preparing a business continuity plan to ensure core functions and key personnel are identified and to ensure normal operations can resume as quickly as possible after an earthquake.
You’ll want to consider the following:
Fix hazards in the workplace. Do a walkthrough with key personnel to identify issues that may become hazards in case of a temblor. That may include fixing loose shelving, removing heavy items from top shelves, securing cabinets with breakables in them, and securing wall fixtures and inventory to avoid damage to the products or injury to staff.
Set evacuation procedures. Develop and test an emergency evacuation procedure and create a shelter in a place at your business where you can house employees or customers if necessary. Establish a designated emergency area outside of the workplace for your staff to meet after an event. Ideally, the location should be open-air and free of other buildings or power lines.
Make sure that your employees are aware of the site of the designated emergency area. Conduct a roll call of employees, depending on the size of your company.
Create a communication plan. Develop a communication plan to implement following a quake. Make sure you have a list of key contacts — personnel, vendors and suppliers, etc. — and develop a media communication plan so you can reach your customers through news channels.
Take steps to protect vital records. There are many vendors who provide off-site storage of data. Ask your peers for recommendations or check with your insurance agent, who may have access to business recovery vendors.
Earthquake insurance is not covered under a standard business insurance policy. Similar to flood insurance, earthquake coverage usually must be purchased separately, either as a stand-alone policy or what’s known as a “differences in conditions” policy.
Stand-alone earthquake insurance typically covers the cost of repairs to property damaged in a quake as well as damaged and destroyed furnishings, equipment, and inventory. There may also be coverage for fire following a quake.
Policies may also cover claims for business interruption costs. Vehicles are covered for earthquake damage under the comprehensive part of a commercial insurance policy.
Small business owners should calculate the full sum it would take to repair or rebuild the business in the event of an earthquake. This covers a wide range of costs, from engineering requirements for rebuilding office space to inventory storage while repairs are being done to the building(s).
Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, would not be covered by standard business insurance policies.
However, one of the most common types of damage from an earthquake is water damage resulting from broke sprinklers that turn on when the building shakes. An earthquake sprinkler leakage or sprinkler leakage endorsement may provide coverage for the building and/or contents inside the building should the sprinkler system leak due to a quake or accident.
Take the Quiz: Is Your Business Ready?*
Answer Yes, No, or Unsure to the questions below. Your answers could determine how you handle a disaster.
- Assembled a team of key personnel who know key operations and can provide important perspectives when planning for and responding to disasters?
- Organized your critical documents and information so they are easily accessible when needed most?
- Identified and prioritized which business operations are critical so you know what to recover first, second, etc.?
- Developed continuity or emergency procedures so you can continue to provide products or services after a disaster (e.g. we cannot access our building, need a generator, etc.)?
- Made accessible important data or files for decision-making if you were unable to access your facility?
- Maintained updated emergency contact information for employees, vendors, suppliers, customers, and other key contacts?
- Trained employees to assist (e.g. respond to injuries, evacuate building) when an emergency occurs?
- Maintained emergency supplies for your businesses to address immediate needs, such as if employees are unable to go home?
- Regularly backed up your data and are storing backup copies off-site, or on the cloud?
- Taken steps to safeguard against potential damage to your equipment, buildings or facilities?
- Maintained procedures to communicate after a disaster with employees, suppliers, and vendors?
If you got 9-11 correct: Your organization is better prepared than most (possibly even your competitors) and there are simple resources to address any gaps.
If you got 5-8 correct: Your organization has taken some preparedness steps. You are at less risk, yet there is room to improve.
If you got under 5: Your organization is at risk of interruption.
If you need help making sure your small business has the correct insurance for this and other types of risk contact VMA today, and we can help you get you covered. Contact email@example.com today.
*Quiz source: U.S. Chamber of Commerce Foundation