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3 Steps To Properly Insure Small Businesses In A Natural Disaster

3 steps to properly insure small businesses in a natural disaster as a business owner is priority number one.

Peter J. Strauss, attorney and captive insurance manager, author of The Business Owner’s Definitive Guide to Captive Insurance Companies explains.

Almost 40 percent of small businesses don’t reopen after a disaster because the cost of recovery is so high, according to the Federal Emergency Management Agency. One of the major reasons is that the businesses didn’t have sufficient insurance.

“Many small business owners will face additional losses due to these disasters, some of which may not be as obvious as flood or wind-damage claims,” says Peter.

The recent wildfires right here in Los Angeles and California, three major hurricanes this year in the U.S., an earthquake in Mexico and tornadoes in Oklahoma all have one thing in common.

They inflicted billions of dollars in property damage and adversely affected many small businesses.

History portends that many of those events will never completely recover – ever.

Strauss gives three steps owners should take to properly insure small businesses in the event of a disaster.

  1. Plan for the worst. Natural disasters can affect small businesses in a multitude of ways. Business owners need to understand their exposure to risk by having a professional risk assessment specific to potential damage when reviewing an insurance policy. Things like costs incurred because the business is closed, extra expenses for moving to a temporary location and loss of customers and employees are all possible.
  2. Don’t roll the DICE. Strauss references the insurance acronym DICE as a checklist for analyzing your policy. DICE includes the Declarations page, the Insuring agreement, Conditions, and Exclusions.
  3. Consider insurance alternatives. Some small business owners shopping the commercial insurance market find that the coverage is too restrictive or expensive for their kind of business. One of the best options available is to form a captive insurance company, or more commonly called a ‘Captive.’

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A Captive is an insurance company that their business owns and controls. Allowing for greater control over the cost of premiums, because the business determines the risks it is going to insure.

“The business owner should read the policy thoroughly or go one step further and have an expert review the policy,” Strauss says. “The Declarations page is as far as most people will read. But when you dig into the Insuring agreement and beyond, that is where you will find the real meat of what is actually covered. Pay attention to key words and phrases and research the terms.”

Peter J StraussPeter J. Strauss is an attorney, captive insurance manager and author of several books, including most recently The Business Owner’s Definitive Guide to Captive Insurance Companies. He is the founder and managing member of The Strauss Law Firm, LLC, on Hilton Head Island, S.C, and also the founder and CEO of Hamilton Captive Management, LLC. A graduate of the New England School of Law, he holds an LL.M. in estate planning from the University of Miami and speaks regularly at public seminars.

For more information contact Peter J. Strauss at

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