When considering an insurance plan, many business owners think of what they can’t afford to lose. The equipment that produces your product is important, of course, but one of the most valuable aspects of today’s businesses is data.
“People have to be careful because they will insure equipment and
media, but people have to check their policy to see if there is coverage
for data,” says Nancy Zollo, CPCU, AIC, senior claim representative
with Hortica®, a brand of the Sentry Insurance Group. “Some policies may
provide coverage; however, it may be an optional endorsement. You
really need to know your insurance policy.”
Hardware failure,
lightning strikes, power surges and fluctuations can all le
ave you
without that precious data. Physical storms are a major culprit, and
usually lead to a longer-term outage and suspension of your business.
In insurance terms, lightning and fire are considered standard perils. Power surge isn’t always covered, so check your policy.
Storm
surge is often part of a hurricane. Most insurance policies do not
cover this peril, but The Federal Flood Program is an option to cover
Business Personal Property, which includes computer equipment. Because
data recovery may be an out-of-pocket expense for the affected business,
any and all precautions will only help post-storm.
What to protect
From
an accounting and bookkeeping perspective, sales, inventory, payroll
and income statements are crucial. You might have an accountant who
takes care of this part of the business, but many smaller retailers and
growers may not.
“Those records are key in the event of a loss,
whether it’s a failure of hard drive or physical damage from a hurricane
or tornado, because you want those available to reload, to get back in
business as soon as possible,” Zollo says.
Income statements are
particularly important if you have business income insurance. In the
event of a claim, you will need them to show your carrier your typical
income for a given time period. Insurance companies prefer monthly
profit and loss statements, because they are the most up-to-date, but
quarterly reports may suffice.
“You have to have data — we can’t
just guess,” Zollo says. “Especially if you’re seeing an uptick in
income. Even if you can say ‘I’ve implemented a new business plan, I’ve
added service XYZ, and my sales this year are up 25 percent from last
year.’ You have to be able to prove that trend. A claim representative
will look at historical data to show what income you should have seen if
not for the loss. If you’ve made changes or if you have an upward
trend, it’s important to meet with your accountant quarterly. You want
to be able to document that.”
Preset sales agreements, equipment
leases, corporate records, and existing contracts that are suspended at
the moment but may be picked up again are more examples of data to
protect. LLC documents and payroll records would be a major headache for
a business that lost them in a disaster.
“Anything with a raised seal needs to be safe,” Zollo says. “To reproduce those would take time and expense.”
In
the horticulture industry, smaller nurseries and greenhouse growers may
keep track of their own payroll. Zollo highly recommends these growers
back up that data — even if it is a manual process. You may need to be
able to prove what you’ve paid to which employee.
In addition to
financial data, it is important to protect your customer database. If
your hard drive is wiped out from a storm surge, or your facility is
lost in a tornado, you need to be able to know who still owes you money
and who’s scheduled for a delivery. When your business gets back on its
feet, you’ll need those customers.
“You could have a fire in your
main production building, but still have plants outside you can still
sell,” Zollo says. “So you need your customer information so you can get
shipping as soon as possible.”
How to protect it
There
are two main options for backing up your data: manually copying files to
a disk or external drive, or using an outside service to automatically
back up your files to a remote location.
If
you do it yourself, Zollo has a few tips: check the backup to make sure
the copy actually worked and you could use it, if necessary. Next, get
the backup away from the business — at home or with your accountant.
Your backup won’t do much good if it’s lost in the same disaster as the
original.
There are also network-attached storage options — separate servers for saving data that can be set for automatic backups.
There
are also cloud storage options that give a small amount of space for
free. The major advantage to these is that data entered syncs between
multiple machines.
“If you’re evacuated for a hurricane, you can
grab your laptop and whatever you can and you go,” Zollo says. “If your
place has severe damage, with the cloud-based options you can sync your
data with your laptop and start notifying customers while you’re away.”
Zollo
says the cloud-based backup can be a good option for small to midsize
businesses. A large wholesale nursery or retailer may consider an
internet provider that provides encryption, more space and more options
for a fee.
— Matt McClellan
Image: Cloud-based data backup can be a good option for small to midsize businesses. Dreamstime.com
What to do about water
Water goes where it wants and finds the lowest spot. To help protect any equipment and contents remaining on site, consider these four tips:
1. Sandbag around the building. Keep a look out for vents, and other potential open paths for the water to find.
2. Elevate equipment in basement areas and/or on the ground floor to minimize damage.
3. Turn off electricity and unplug hardware.
4. Make sure data backups are not on site. If the normal off-site data storage location is nearby and also in the warning area for storm surge, move it.
