When the unexpected strikes

The tornado that hit Jackson Township a month ago not only destroyed homes, it forced several businesses on The Strip shopping center in North Canton to temporarily close their doors.

Because most of the owners — both home and business — were so well insured, the township didn’t qualify for federal aid. But that didn’t ensure against profit losses for those businesses. Property insurance isn’t the only coverage you need to keep you in business if disaster strikes.

I spoke to experts in the insurance industry to find out what types of coverage are available, as well as how to decide what to purchase — without solely relying on the recommendation of your insurance agent.

Most agree that both the type of insurance you decide to carry and the level of coverage provided by each are equally important.

First, learn everything you can from people with training and experience in the business, and don’t rely on just one insurance agent’s advice. Ask about the type of insurance available, the recommended levels of coverage and the premium costs of each alternative. Also ask about business continuation insurance, coverage that replaces income if your business is interrupted.

Then, talk to owners of businesses similar to yours about their coverage and their experiences with different types of coverage. And remember to change or update your coverage periodically.

Here are the two most basic areas of business insurance that agents mention:

1. Liability and property coverage is probably the most basic and critical coverage a small business needs. Property insurance protects in the event of fire and theft, while liability protects a business from lawsuits due to injury or damage to a third party.

Additional coverage can be purchased for computer protection, earthquake and flood insurance, workers’ comp or autos.

2. Business interruption insurance is designed to cover the loss of income incurred if normal business operations are disrupted or halted by damage to property. If your business’s location is critical to your ability to produce revenue, you should carry business interruption insurance.

Businesses most affected by this kind of loss include manufacturing, wholesale and retail. Those less affected include most service businesses. But still, many service businesses affected by the World Trade Center attacks suffered from business income losses because customers or vendors were unable to reach them.

In this case, business interruption insurance may not have covered profit losses, so make sure you fully understand the limitations of your coverage.

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