How Business Interruption Insurance Fits Into Your Disaster Recovery Plan
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How Business Interruption Insurance Fits into Your Disaster Recovery Plan

No business is invulnerable to misfortune. If a disaster or other disruption forces your business to temporarily shut down, how will you survive the interruption?

There's a nifty policy known as Business Interruption Insurance that can provide coverage for your ongoing expenses when a covered Property Insurance event forces you to halt operations. (For more on this policy's specific coverage, read "What Business Interruption Insurance Can and Can't Cover.")

With this ace in your insurance policy portfolio, you can handle any disruption, right? Not quite. Business Interruption is only one part of an effective disaster recovery plan.

Every business needs a disaster recovery plan to provide the groundwork that makes insurance benefits useful. Let's look at Business Interruption Insurance's role in a comprehensive disaster recovery plan.

What Is a Disaster Recovery Plan?

A disaster recovery plan (DRP) is a planned set of procedures and guidelines to protect business infrastructure and direct restoration efforts after a disaster. This disaster can be natural, environmental, or manmade. In short, a disaster recovery plan guides you through your next steps after a business disruption.

Disaster Recovery Journal and business continuity consultant Avalution offer business continuity sample templates that can help you get started. Before developing your DRP, you may want to:

  • Consider the potential impact of a disaster on your business.
  • Assess your business's potential risks.
  • Develop strategies to effectively respond to a crisis.
  • Plan documentation and maintenance for your business infrastructure.

Once you're ready, create a business disruption plan that outlines…

  • How to notify employees about a disaster and next steps for the business.
  • How to notify customers if you must temporarily move to another location.
  • Which backup supply chains to use when your primary suppliers aren't available.

Make sure your DRP includes relevant contact information for employees, suppliers, and your insurance carrier, as well as insurance policy information so you can properly report any claims. Share your plan with employees, and keep extra copies of your valuable records and documents in a secondary location away from your business.

For more tips on building a disaster recovery plan, check out "What's Your Business Interruption Plan?"

Business Interruption Insurance, Meet the Disaster Recovery Plan

Insurance alone isn't enough to get your business through a catastrophe. Think of it this way: a disaster recovery plan is the map you follow to get your business back to top form; Business Interruption Insurance is the car that gets you there. Plus, many insurers will want to verify you've done your due diligence in the role of prevention, making a DRP all the more important.

When a disaster strikes, you may feel overwhelmed and unsure of how to even begin rebuilding your business. A comprehensive DRP can help your business respond to a crisis, and when combined with your Business Income Insurance benefits, it improves your chances of quickly getting your business back on its feet.

Business Interruption Insurance: Further Reading