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Louisiana Technology Group found out the hard way that added travel expenses due to employees having to leave their homes to come to work and customers leaving voluntarily were not covered under his original policy.
"There are all these little intricate things that do not apply in a disaster. Like if your building does not flood but you can't operate because you lost electricity. It only kicks in if you lose the facility itself," Romanos said. "And nothing is cheap anymore down here. We used to pay $6,000 or $7,000 a year for all our insurance. Now we pay $14,000 or $15,000 and it's not as good as it was before."
Louisiana Technology Group regularly has lawyers read the insurance policies before signing anything, Romanos said.
"It was the policy we bought. Nobody is going to give you something. We learned a lot with that," he said. "Now we have people on retainer just to read lots of fine print everywhere. I would highly recommend having a contract person in-house to review it initially. And before you sign the final review, get an attorney to make sure all the t's are crossed and i's are dotted."
Solution providers need to be very clear on not just business interruption insurance policies, but all contracts and documents on who is responsible for what after a disaster, said Bradley Gross, an attorney based in Weston, Fla., who specializes in solution provider contracts.
"From a legal perspective, you have to make it very clear on what you can provide and what you cannot provide and what you expect and what you do not expect," Gross said. "Managing expectations such that they should never think they're getting something that they're not. That goes for both [solution providers] and their customers."
Many insurance companies have differing views of solution provider businesses, Gross said, because many people are entering the business without experience or discipline. Of course, there are many successful solution provider businesses but others open and shut their doors quickly, making it difficult for insurance companies to judge them, Gross said.
"Insurance companies are probably aware of companies shutting down. I call those companies the 'let's give it a shot' type people. That's not going to help solution providers with insurance companies," he said.
No. 10. Practice, Practice, Practice
Perhaps the most important preventative tip to handle a disastrous situation is to practice your business continuity plan in as much a real-life situation as possible, according to the SBA.
Like muscles in the human body, emergency plans should be exercised to stave off atrophy and make sure they stay strong. It's a good idea to put the preparedness plan on paper, share it with staff, test it annually and update as needed.
It's important to replicate a disaster as closely as possible because people react in different ways compared to when they know it's just a test, said Semel Consulting's Mike Semel.
"They don't think through the idea of it's not just their employees [impacted] but their employees' families and pets. You're not coming to work if you don't know your family is OK. These things need to be considered," Semel said.
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