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When Network Computing Architects suffered a catastrophic fire that destroyed its headquarters in 2001, CEO Tom Gobeille wasn't worried at the time about rebuilding because the solution provider carried a $2 million business interruption insurance policy.
But Gobeille quickly found out that having a policy and receiving a benefit are two different animals. Network Computing Architects eventually settled for $300,000 because the insurance company attributed the loss of business to the macroeconomic downturn and not the fire, Gobeille said.
Here are the final two steps in disaster recovery planning, Nos. 9 and 10.
No. 9: Closely Examine Business Interruption Insurance
Business interruption insurance compensates for lost income if a company is closed for a period after a disaster. Even shutting the doors for a brief period during a power outage or other scenario is a major cause of economic injury to small businesses, according to the Small Business Administration. Solution providers should keep detailed records that can validate that they lost business due to an emergency situation.
For Network Computing Architects, it was difficult to prove the fire caused the loss of business, particularly with documents lost in the fire, Gobeille said.
Solution providers should keep accurate records that they can access after a disaster, Gobeille advised.
"If you have a ball-bearing manufacturing plant, you can prove your assembly line is gone. But when you sell consulting services and do what we do for a living, they came up with a hundred reasons why the loss of the building was not the reason," he said. "Whether in good times or bad, people need to look closely at their coverage for business continuation. Make sure in a loss you can defend it."
Now Network Computing Architects carries only a $200,000 policy, which didn't make the insurance company happy, but Gobeille doesn't care.
"They were upset, but there's no point in having extensive business continuation if you have a VAR profile and there are many instruments they say can affect the business," Gobeille said.
Likewise, Louisiana Technology Group's Tony Romanos cautioned solution providers to look very closely at the clauses in their insurance policies.
"A lot of them omit necessary clauses that you need. Right now, the policy we have today is much weaker than one we had previously [to Hurricane Katrina]," he said.
In particular, clauses on time limits and financial caps for individual items should be scrutinized, Romanos said.
"The one we had before [Katrina] was a little more liberal. We had to fight for every dollar, every expense, every receipt," he said. "In the chaos of the situation, you just pay for stuff and move on. But keep track of every expense you do. Document it and try to fight for it."