Plan Smart for Unexpected Shutdowns

Clients often dismiss business interruption insurance as an unnecessary expense – until they’re immersed in a crisis that brings operations to a screeching halt. This can be a natural disaster or a man-made mishap, but the results can be financially devastating for both with smaller and medium-sized organizations.

Today, any business owner not considering cyber security in management strategies is putting their livelihood at risk. One incident can bring a company to insolvency. The FBI reported 4,000 ransomware attacks occurred each day in 2016. Case law has been mixed on whether computer hardware and down time is covered under certain policies. Many policies don’t kick in until 72 hours have passed. That’s too long if a business is dependent on computers to process transactions. (Some policies are now specifying computer related issues with an 8-hour time frame.)

As you consider the risks you may incur in business operations, it’s important to have an insurance agent and/or underwriter who takes the time to understand your issues and helps create a policy in line with your needs. It’s also wise to have an attorney review these contracts to ensure the industry standard language gives you the coverage you’re expecting. Sometimes you need to consider manuscripting custom language.

It’s too late to verify what you thought you had in coverage after you’ve experienced a loss. Insurance company interpretations can be subjective. Litigation is a lot more expensive to contest such decisions than safeguarding yourself with some expertise before you pay your first premium on a policy. Plan ahead!

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