Are You Ready For a Disaster? | Promotional Consultant

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Are You Ready For a Disaster?
By: Robert D. and Carol Anderson
Issue: May 2010

In a letter to Jean-Baptiste Leroy in 1789, Benjamin Franklin wrote, “In this world nothing can be said to be certain, except death and taxes.” As property catastrophe insurance adjusters for the past 20-plus years, my wife and I would add one other certainty: catastrophes.

Hurricanes, floods, earthquakes, tornados, fires, terrorist attacks. The 2008 flood of Cedar Rapids, Iowa, ravaged the entire downtown business district. Mudslides and wildfires in California have completely destroyed homes and businesses. And the recent devastating earthquakes in Haiti, Chile and Turkey should remind us all that a catastrophe can strike at any moment, many times with little or no warning. If your business or home (or both) is involved in a catastrophic event, are your financial and personal records safe? Maybe not.

In the aftermath of Hurricane Katrina we handled a claim for a business owner in Mississippi whose business and house were swept away. All of his records were gone. Most commercial policies cover business interruption, which requires payroll records, inventories, and profit and loss statements to calculate how much profit the business lost while being shut down. This business owner had no records, so we contacted his accountant. But his accountant’s business and house were also gone along with his clients’ records. The only thing this business owner could do was to request a copy of his federal tax return from the IRS, and you can guess how long that took.

While it may not fit into the catastrophe category, a burglary can certainly feel like one. For 15 years before we began chasing hurricanes, earthquakes, Nor’easters and hail storms around the country as insurance adjusters, my wife and I operated a promotional products distributorship. We had a nice office with a great showroom, located on a major street in a nice neighborhood. Several of our policemen friends stopped in for coffee on their regular patrols. But, in those 15 years we were broken into three times. One time burglars damaged and/or stole many of our samples and made off with a computer and a typewriter. (Remember those?) Another time they found our checkbook. We later discovered they had written and cashed many checks at local supermarkets. This wasn’t a true catastrophe, but it caused a great deal of anxiety and disruption in our business. Thanks to our newly installed alarm system, nothing was taken the last time and the thief was caught.

Let’s explore how you, as a promotional products professional, can protect your business and personal records:

Be Safe With A Safe
Every business needs a safe that is waterproof and can withstand temperatures up to 1,700 degrees. It should be bolted to the floor of the lowest level in your building (such as a basement) so it doesn’t fall through the floor during a fire, or get carried off by burglars. You should consider a safe for your home, too.

If you’re a large supplier, you may need a records vault. The National Fire Protection Association’s publication “NFPA 232” contains requirements and guidance for protecting paper records and magnetic media, and covers such topics as emergency planning, fire risk evaluation, and operations and housekeeping issues. The only topics it doesn’t address are the protection of cellulose nitrate film records and forcible entry. You can see a list of all NFPA’s codes and standards.

Open A Safety Deposit Box At An Out-Of-Town Bank
If a city-wide disaster strikes, your bank may also be damaged or under water, as was the case in Cedar Rapids. Use the same bank that holds your accounts, but have a safety deposit box in an out-of-town branch to hold copies of your records.

Create A Financial Disaster Kit
Gather all your important documents and make at least four photocopies of everything. Record all the account numbers of your credit cards, bank accounts, retirement accounts, insurance policies and brokerage accounts. Include your most recent federal tax return, current profit and loss statement, payroll records, accounts payable/receivable and lease agreement if you’re renting.

What if your showroom were destroyed? Will you remember what was in it and what came from which supplier? Make an inventory of your samples and showcases and prepare a list of those vendors. As you rotate or update your samples, take photographs or videos of them and keep them with your inventory list. Place one set of these papers in your business safe, one in your home safe, one in your safety deposit box and one in your out-of-town safety deposit box.

Have An Emergency Cash Fund
A disaster strikes. Electricity is out. Banks are closed. ATMs aren’t working. How do you purchase basic necessities? Try to accumulate the cash you will need for at least three months of continuing expenses, temporary repairs and possibly payroll. Keep this cash (or travelers checks) in your safe or where you can get to it in a moment’s notice.

Back-Up Your Computer Often
Okay, so you back-up your computer at regular intervals. But where do you keep that CD, USB drive or tape drive? On a shelf? In your desk drawer? Keep it in your safe. Investigate the many internet-based data back-up services now available. Your data-security program may even have such a back-up service. Many are now available for a monthly fee.

Make Inventories Of Your Business Personal Property
Adjusters are trained to handle the building portion of your loss, but when it comes to contents it could get a little sticky. If you submit a list of lost, damaged or destroyed contents with no supporting photos or documentation, the processing of your claim could take much longer. Your inventory can be in photo or video format. Place copies of the photos or videos and any important scanned documents, along with detailed documentation, on your hard-drive, back-up CD or DVD and store in both safes and/or your safety deposit box. Have copies of purchase receipts for all of your business personal property (BPP), or at least for items such as computers, current inventories, samples, artwork (including appraisals), furniture suites and business equipment. And you should have purchase receipts for any samples you claim. Make certain you document the age or date of purchase for each item along with the purchase price.

Know Your Insurance Policies
Review your business policy to see if it needs updating. Understand the difference between replacement cost (RC) and actual cash value (ACV) coverage. Make sure your BPP coverage is adequate to replace everything if it is all destroyed. Consider Business Interruption (BI) coverage. This could provide you with lost profits during your downtime. Ask your agent to explain this coverage and advise when it is available and how it works. Bottom line: Know what’s covered and what’s not. If you have any questions on coverage, check with your agent.

Back-Up Your Back-Up
As an additional layer of protection, make a copy of all your financial records, documents, deeds and your financial kit. Send this packet to a trusted relative or friend in another part of the country. Ask this person to keep your packet in a safe place, such as a home safe or safety deposit box.

Have An Emergency Operating Back-up Plan
If a catastrophe, or any other event, shuts down your business for what appears to be a considerable amount of time, what would you do? Perhaps you could bring in a portable building at your site (such as a trailer or modular home) while rebuilding or repairs are underway. Or you might be able to temporarily re-locate in another location or business in your city or a neighboring city with which you can operate or share space until you can resume in your own. If you’re leasing, perhaps your landlord has other available space. Your insurance policy may cover the cost of this relocation under what is termed Extra Expense (EE) coverage. This coverage could also help replace lost or damaged equipment that’s essential to running your business, i.e., furniture, computers, samples, screen presses. Check with your agent.

Investigate Alarm Systems
Alarm systems can certainly deter thieves. But these days a multitude of other alarm systems can warn of impending disaster. Systems are available that can monitor the air levels for smoke or fire, carbon monoxide and dioxide levels, radon and moisture levels in the event of a pipe break. They can even be wireless if you lease your space. A hard-wired system will still work when the electricity is out, as long as it’s tied to a battery back-up. Check with your local alarm system dealer for a system that meets your needs.

If you’re a small distributor or a large supplier, when a disaster strikes, you won’t be happy … but you can be safe.

For 36 years Robert and Carol Anderson have operated a promotional products distributorship and an insurance adjusting firm in Omaha, Nebraska. They later began traveling the country as property catastrophe insurance adjusters. Now that they’re semi-retired, Robert is resuming his freelance writing career. His articles have appeared in “Omaha Magazine,” “American Forests,” “Farm Family America” and several other publications. The articles can be viewed on his blog. He is currently conducting research for a book on Jacob Maag, a 20th century stone and marble sculptor in the Midwest.

What About Non-Catastrophic Events? Consider these statistics from the FBI:

In 2008, there were an estimated 2.2 million burglaries. The FBI’s Uniform Crime Reporting (UCR) Program defines burglary as the unlawful entry of a structure to commit a felony or theft.

There were an estimated 6.6 million larceny-thefts nationwide in 2008. The FBI’s Uniform Crime Reporting (UCR) Program defines larceny-theft as the unlawful taking, carrying, leading or riding away of property from the possession or constructive possession of another.

—Robert and Carol Anderson

You Can Prevent A Fire
Some tips from the National Fire Protection Association (NFPA):

• Keep fixed and portable space heaters at least three feet from anything that can burn. Turn off heaters when you leave the room.
• Replace cords that are cracked, damaged, have broken plugs or have loose connections.
• Keep candles at least one foot from anything that can burn. Blow out candles when you leave the room.
• Make a fire escape plan and practice it at least twice a year.
• Install smoke alarms in every room of your business. Interconnect smoke alarms throughout the business. When one sounds, they all sound.
• Test smoke alarms at least once a month and replace batteries once a year or when the alarm chirps. Replace any smoke alarm that is more than 10 years old.
• If you are building or remodeling your business, install fire sprinklers. Sprinklers may even extinguish a fire in less time than it would take the fire department to arrive. PC

—Robert and Carol Anderson