When Bad Things Happen to Good Businesses: 4 Steps to Help You Protect Your Company

March 20, 2020

Editor's note: PCT interviewed Allen Fugler, director of risk management for Xterminator Pro, a division of Houston International Insurance Group (HIIG), for our spring survival guide. In the following online extra, Fugler recommends putting the following protections into place:
1. Use offsite or cloud storage to back up important records and files.
Backing up your business data through offsite and/or cloud storage is essential to its preservation and recovery in the event your local hard drive crashes. Make sure you have adequate storage and get into a routine of running backups weekly or monthly. Back up everything: computer files, company data, customer records, accounting files, marketing plans, passwords — everything you have stored on a computer should also be stored somewhere else. 
2. Make sure you have adequate insurance.
General Liability Insurance (GL) is required in 40 of the 50 states, but you should buy coverage even if your state doesn’t require it by statute. Here’s why: GL protects your business when a person claims your action (or inaction) caused them harm — e.g., your technician applied a product that they say physically injured them, or termites got in and damaged their property. You can’t afford to have an accusation of this kind without GL coverage. 
Workers’ Compensation Insurance (WC) protects the health and safety of your workers, paying for medical bills and a percentage of lost wages until that employee is healed and able to rejoin your workforce. CP, Commercial Property Insurance, covers the building and/or contents of your office. If you lease space, it would cover computers, files, furniture and other physical assets. If you own the building, it covers those assets plus the building itself, much like a homeowner’s policy. 
Employment Practices Liability Insurance (EPLI) is insurance for wrongful termination, discrimination, sexual harassment and other employee-related accusations that are not covered under GL. 
Cyber Insurance protects your business from internet-based risks — cyberattacks, data breaches, etc. While other policies may also have some cyber coverage, it’s usually very limited. 
Inland Marine Insurance (IM) covers your equipment. Though its name can be misleading, IM has nothing to do with boats or bodies of water. Rather, it protects the higher-ticket items you specify on this policy. You might include bed bug heat equipment, equipment bolted to your service vehicles (e.g., a pump rig or tank), an expensive vehicle wrap, etc. As opposed to cash value, which is reduced by age, IM reimburses for the actual replacement cost at today’s prices. 
Excess Insurance is an additional layer of coverage you may choose to carry over any previously mentioned policy. You can have $1 million, $2 million, $3 million or more over the additional limits of liability. It’s modularized so you can put it toward GL, WC, auto, etc. 
3. Develop a business recovery plan to address major natural and manmade events.
If you live in an earthquake-prone area, what happens when the ground shakes and the roof falls in? Or you can’t access your office anymore for fear of building collapse? Likewise, what could happen to your business in a hurricane, a flood, a terrorist attack or an active shooter situation? It’s important to establish who will be in charge, what procedures you will follow and how you will communicate with one another. Estimate your recovery time frame and take steps to minimize it. 
FEMA provides a good template on its website: It addresses issues by type of disaster and examines what companies can do to get back into business asap. Try to address as many of the most likely scenarios as possible, and prioritize them from the most to least likely to happen. 
Business interruption insurance is included in most Commercial Property Insurance (CP) policies, offering reimbursement for dollars lost when money stops flowing in, based on your average receipts for that time period. Unfortunately, a lesson many people learned after Hurricanes Irma, Michael and Katrina is that some things can’t be insured. You can’t insure what happens when your customer base is wiped out, for example. 
4. Designate a capable spokesperson.
Your designated spokesperson will serve as the face of your business when communicating with the media, first responders, regulators, attorneys and claims adjusters. Choose someone who can answer questions and clearly state the company’s stance whether they have a local news reporter’s microphone in their face or simply a customer on the phone saying, “You treated our home last week and now my dog is sick. What are you going to do about it?”