We started down the road on our Business Personal Property by talking about under-insurance. The next issue I’d like to discuss is “attachment” (as in to the structure not as in “I like something”) and its effect on where the items are covered and how the coverage may be affected.
As a building owner you may be adding to the value of your structure with permanently attached equipment, and furnishings. As a tenant you may be increasing the value of your contents coverage by altering the interior structure to meet your needs as an improvement or betterment. A careful examination of your policy language will help you sort it out and may have an effect on your premium. The cost structure for building and contents is different so moving property from one group to another may affect your totals in each area and your overall total premium. Either way – it’s better to know that all of your contributions will be recognized.
This afternoon I attended the #TulsaRegionalChamber of Commerce’s annual meeting. In his annual remarks the incoming chairman Alan Armstrong mentioned the over 80% of the Businesses in Tulsa are Small Business. He talked about supporting our Small Business community and promoting its dynamic development. For some time now we’ve been working toward the integration of Small Business Continuity planning into a “Disaster Resilient Community” approach. We’ve been working with Chambers of Commerce to support and sponsor the training of your local Small Businesses to increase the level of preparedness of your entire community.
Today’s remarks reminded me that we haven’t really secured a foothold yet in this movement, and that it was time to start again. My team – The Disaster Resistant Business Council in Tulsa stands ready to partner with any city, town, region or organization to advance the issue of preparedness within your community and it’s small businesses. If you have any questions, would like to re-start your efforts, or would like to connect for the first time, please feel free to respond to this posting
I’ve been traveling this week so I’m grabbing some time at DFW to write of the first of what I think will be a series of post to cover Business Personal Property. There are several connected issues within this topic that would create a post that would be long and confusing – much like the coverage itself. So let’s start here…
Most likely you’re under insured. You got your coverage amount as a percentage of your total building value, or a recommendation from your agent, or it was what you could afford. Did you actually take stock of what you have or more importantly what you need to continue your business? Try this – stand in the middle of every room in your Small business, activate the camera on your phone, and spin 360 degrees. When you’ve done all the rooms sit down and watch the video and see if you can identify what you see. In the event of a total loss it all goes. What do you need to start over? Equipment, records, computers, files, inventory, fixtures, etc.. Now do some rough calculations. What would it cost?
Since I’m in the Insurance industry I thought I’d start with discussing how the modern insurance package policy covers risks and reacts in certain situations. We’ll take some detours along the way to connect items like facilities planning to Section 1 (property) coverages. Section 1, or Property coverages, are usually split into coverages into Building and Contents.
Typically the most contentious issue when insuring a building is valuation. Most policies today are written on a “replacement cost” basis so the question really is “could you completely replace the building you own and occupy given an event that would completely raze the structure?” Remember that we’re dealing with construction costs – not what you can buy it for, or its market value. So, and especially in areas of market depression or artificially inflated construction costs there are issues of both over and under insurance. But for our purposes – Coordination with a consolidated Business Continuity Plan – we’re recommending that your building coverage be sufficient to replace your location given a total loss event. If you a building owner see if you can get a building appraisal – not a real estate appraisal – but a construction appraisal, and if possible, get more than one. They can be wildly different. At least then you’ll know what you’re working toward and what it will mean to you financially.
Over the weekend I was struck by the increasing societal need to either blame others or more to the point to have someone else to blame. Not only does this make us feel better, but it relieves us the responsibility and accountability for and of our actions. Just one time I’d love for someone to hold up there hand, calmly and assertively, in either a good or a bad situation, and say “My fault”. Usually when I’m out talking to Chambers of Commerce, Small Businesses or town leaders about business continuity we inevitably get to the question about preparedness and the all-to-often answer sounds particularly similar to “Why would I need to prepare, that’s why I buy insurance”
This concerns me for a variety of reasons. First and foremost, I’m an insurance geek, and while the purchase of a Small Business Insurance package policy that meets the needs of a particular Business in a critical component of any Business Preparedness strategy for any business. One thing is not a substitute for the other. According to the SBA anywhere from 15-40% of Small Business fail after a major event, and iii estimates that 40% of all Small Businesses are completely uninsured. So obviously having the proper insurance coverages is a critical piece of the recovery, but ceding the responsibility for being accountable for the management of your business is not the intention. We’ll look into this aspect of Small Business Planning in future entries, but I wanted to make sure that our first statement around Small Business Continuity Planning revolves are our personal accountability to own this process.
Why are we here? Earthquakes in the west and mid-west, rain and mudslides in the west, snow and ice storms, tornadoes, wind and hail, riots and civil commotion. There are a variety of ways that your small business could be affected by any or all of these. Are you ready – I mean really ready. Not just “I think I have an insurance policy that may, or may not be adequate” ready, but ready as is able to survive. The SBA tells us the over 85 % of businesses in the US are “small”. If your community is powered by sales tax, or even if it isn’t and it’s just your local economy, and your small business community is improperly prepared for a major event what happens next? This Blog will be dedicated to opening a dialog and sharing information and ideas for this particular community or those who are affected or could influence. My hope is that we will develop a robust community of support, ideas, resources and materials so that we can begin to own our own particular experience. I’ve been speaking on this particular topic around the country for the last 10 years and particularly work in Oklahoma, but I know that this is an issue everywhere for every member of the Small Business Community. I’d love to see disaster resistant communities where the well-being of the small businesses is considered within the overall strategy, where training and materials and planning is provided and endorsed. These areas may already exist, but in my travels so far, I’ve not yet found it. I’m hoping this blog will be the start of an extensive journey to find it. Interested? Want to contribute or have a question, let me know.