by Mark Rollins on July 28th, 2010
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In the aftermath of a disaster, many executives fail to think about how they would manage if a fire or natural disaster damaged their premises so that they were temporary unusable. According to the Insurance Information Institute, more than 25 percent of all businesses that close down following a disaster never open their doors again. There are no separate numbers for non profits but it is reasonable to assume it is the same.
From my experience, this is the most misunderstood type of insurance out there. Most insureds and even agents and brokers really do not have the proper grasp of it.
But even if you have business interruption insurance in place there is a good possibility that it may not respond properly. Doing a quick scan of the Insurance Services Office website there are:
5 Coverage Forms and Declarations to choose from
19 Cause of Loss Forms
23 Time Element Endorsements
11 Leasehold Interest Factor Tables
That is a total of 58 different forms and endorsements that have to be reviewed and put together to provide the best combination. Some add coverage and some take it away. On top of this is the actual chore of picking the correct amount. Because each non profit organization is different there is no easy way to determine the best way to pick a limit.
Some of the things to take into consideration are:
Performance Contracts – They may end if you cannot perform
Restricted Donor Commitments – Same as above
Member Dues – We have seen members leave an organization, such as a country club, if there is extensive damage to the facilities
Reputational Injury – As you have seen in the MasterCard commercials, this can be priceless. Very hard to put a dollar amount on this risk
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Tags: Business Interruption, Disaster Planning, Non Profit Risk Management, Not for profit Risk Management, Risk Management
Posted in Business Interruption, Disaster Planning, Insurance Exclusion, Risk Management, Video |
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