Does Your Illinois Business Have Coverage Against Natural Disasters?

Mar 15, 2023

Does your Illinois business have the proper coverage in the event of a natural disaster? If you just carry a basic commercial insurance policy, it may not. In fact, hazards from natural disasters have wide-ranging effects on a small business, and one form of coverage may not protect you from all the damage one natural disaster can have.

To help you find the right mix of insurance policies, learn what you should know about a few of these effects. 

What Are Common Illinois Natural Disasters?

Illinois, like many states, faces a range of potential natural disasters. Many of these come from extreme weather. Winter storms can plunge parts of the state into dangerous freezing temperatures along with snow buildup and ice. Spring and fall may bring rainstorms with wind, lightning, and hail. Both types of storms may then cause flooding both in areas historically prone to it and those not.

As the global climate suffers change, previously uncommon disasters increasingly hit surprising areas. Illinois has experienced disasters ranging from large earthquakes and lake-based tsunamis to tornadoes and wildfire. Your specific region might even face other local risks.

What Is and Isn't Covered by Property Insurance?

Most small businesses purchase a commercial insurance policy that covers property replacement and general liability for accidents on that property. This is an important step and a great place to start. Most property insurance policies will cover repairs or replacement of your business buildings, furniture and equipment inside them, lost inventory, and company assets in company vehicles. 

However, property insurance doesn't extend to company vehicles themselves, and it generally doesn't cover personal belongings or business items at a home-based business. Although it will reimburse you for replacements and repairs, both real estate and vital equipment may be out of commission in the meantime. It also covers only named disasters, often excluding things like flooding from outside sources.

What If You Can't Do Business?

The risks of a natural disaster such as a big winter storm is that you won't be able to continue operating for some time. Consider a serious winter storm that causes your store's roof to cave in from the buildup of snow.

If the store is unsafe to work in, you may have to close until the roof is fixed. But your neighbors are all calling on the same roof contractors as you are, so that may take some time. What will you do in the meantime?

Business interruption insurance is a key protection against this. It supplements property insurance that pays for the repairs on the roof. Your business interruption policy pays you to cover payroll, move to a temporary location during repairs, and even speed up repairs with rush services. Policies that cover business income also fill the gap between what you normally would have earned and what you can earn during repairs.

What Other Dangers May Arise?

If you have coverage to replace expensive equipment or inventory and you get help paying for operating expenses in the aftermath, does that mean you're good to go? Not necessarily. The chaos of the post-disaster period can continue to wreak havoc. 

For instance, reduced security or unattended buildings gives hackers potential entry points into your company's computers and network. They might steal data about your customers or even try to extort you by threatening all that data. Cyber insurance protects a company from the costs involved in breaches and defending itself against lawsuits and investigation costs. 

If your business location is seriously impacted, you are likely to have additional expenses above and beyond a normal month. You might need to rent a large piece of equipment or get temporary offices, for example. Most property insurance policies don’t cover these costs, but they can get coverage through extra (non-ordinary) expense coverage in a business income or interruption policy.

Your particular location and circumstances determine if you also need specialty disaster coverage. Two of the most commonly excluded disasters are floods and earthquakes. If these hit your business, other policies may cover little or none of the resulting damage. Even the same disaster, such as a storm, can leave you with a big bill depending on whether the damage is from wind or water. 

Where Should You Start?

Only a comprehensive package of insurance policies provides the full protection you need to weather a natural disaster successfully. If you aren't sure whether or not you have sufficient coverage in any of these areas, start by learning more about them. Then, analyze your current insurance policy details with a professional to determine the strengths and weaknesses. 

Meet with the team at Illinois Insurance Center today. For 50 years, we've aided businesses throughout the Chicago area and beyond with meeting their coverage needs and protecting their investments. Call to make an appointment, and find out how we can help you do the same.

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