What climate change means for small business insurance

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Your small business may be impacted by climate change. Luckily, there are measures you can take to improve the resiliency of your business.
Polar bears jumping across ice.

Many people tend to think about climate change as a problem for the future or for influential organizations like corporations and governments. The reality is that it’s a problem for everyone, everywhere – they don’t call it global warming for nothing.

As a small business owner, you might not feel that you have any stake in this, but climate change will undoubtedly affect you in some way. For some, this may be in the form of more destructive natural disasters. For others, it will be higher insurance premiums to cover this destruction. So is there anything you can do about it?

Climate change = bigger disasters, more disruption

The consequences of climate change are varied, according to NASA, but the big picture points to more intense disasters and large-scale disruptions than we’re currently used to. It’s very likely climate change will bring along more intense storms, including…

  • Stronger hurricanes
  • More severe flooding
  • More frequent tornadoes

For areas not subjected to destructive storms, you can expect more intense heatwaves and longer droughts. All this is in addition to the increasing sea level, which may rise up to four feet by 2100, according to the Third National Climate Assessment Report.

What does this mean for small business insurance? The question may seem like an odd one, but climate change impacts everything that depends on or is affected by the weather – and that includes small business insurance.

How climate change impacts property insurance and business interruption insurance

Any increase in natural disasters has obvious ramifications for small businesses caught in the destruction. Take a look at the effects of Hurricane Sandy, as listed by business recovery program Rise-NYC:

  • 23,400 businesses inundated by floodwaters
  • $19 billion in estimated damage

Such storms are only going to increase in frequency and in strength in the coming decades. That’s not good for anyone, especially considering FEMA’s statistic that 40% of businesses never reopen after they’re closed because of a natural disaster.

There are some precautions you can take.

These two types of small business insurance  can help your business survive a disaster:

But as climate change brings more disasters to business doorsteps, these insurance policies could become harder to find and much more costly.

What small businesses can do to minimize impact and improve resiliency

Tom Bowman, owner of Bowman Change, Inc., helps businesses and organizations develop sustainable practices. He says the more green small business owners he meets, the more impressed he is with their commitment to changing the world with their companies.

 “There’s huge potential in small businesses, if you aggregate them all,” he adds.

Bowman says there are two main considerations for businesses that want to look ahead and be aware of climate change:

  • Find ways to minimize your impact.
  • Become more resilient to the effects of climate change.

When the conditions become harsher – with stronger hurricanes, longer heat waves, rising sea levels, etc. – businesses will have to determine how they’ll stay in business and manage the challenges. That’s going to depend on a lot on the type of business and the specific climate change problems it faces.

For the present moment, though, Bowman suggests a few ways in which businesses can act greener:

  • Optimize delivery routes so you use less fuel.
  • Find ways to recycle and use less material.
  • Install energy-efficient lights and appliances.
  • Purchase from companies that use sustainable practices.

You might even be surprised at how many little changes you can make that will help the planet. For instance, Bowman says you can cut down the AC and use less energy without sacrificing comfort. “Just circulating the air inside a room, without air conditioning, allows people to feel around 15 degrees cooler.”

Think about how you can use your business to make a change in the world. It may not seem like much, but a little bit goes a long way if everyone takes part.


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