Insurance
Frank Nemshick, president of Accord Restoration, in Baltimore, is called on to respond to different types of emergencies for residential and commercial clients. The company’s 40 employees and trade contractors respond immediately with mitigation work to secure the building, and then estimate the cost of returning it to pre-loss condition.
“Whether it’s a homeowner or business owner, many times I find situations where people are not adequately insured,” he says. “It’s hard enough to run a business with everyday operations, but a catastrophe can be fatal to the survival of your business,” Nemshick says. This is especially true for small businesses that have tight cash flow under normal circumstances, let alone during a disaster.
The subject was brought home recently when a fire occurred in the office building where Nemshick rents space. Of the six tenants, he says, Accord Restoration was the only business that was properly insured. He says that business owners should speak to their insurance agents about five major areas of coverage: structure, liability, contents and equipment, additional expense, and loss of income. Nemshick says that anytime he discusses insurance changes with his agent, he sends a registered letter to the company to confirm the additional coverage he has purchased. He offers this description of the five coverage areas:
1. Structure: If you are leasing your office or renting, read your lease, don’t just sign it. Find out what is your responsibility in the event of an emergency. You might be responsible for inside building materials until you vacate the building, so you need betterments and improvements insurance. If the building owner is only responsible for the shell of the building, you need insurance coverage to pay for the interior restoration. Also check the lease to see if you have to pay rent during the remodel. If not, speak to your agent about including this in your policy.
2.Liability insurance: Most companies have this coverage. Make sure you know what the liability covers. Nemshick says you could add an umbrella to extend your existing coverage.
3.Contents and equipment coverage: Many tenants in Nemshick’s building did not have contents insurance to cover their equipment. Find out from your agent if specific items over a certain cost are covered or if you need separate insurance for that equipment. For example, any one piece of equipment worth more than $1,000 needs to be scheduled on a list and filed with your insurance company. You need money to replace that item in today’s dollars. If you bought it for $200 three years ago and it now costs $400, you need that coverage.
4.Additional expense: If you have a loss that prevents you from returning to your office, additional expense coverage pays for your move to and rental of a temporary office. It usually covers anything over and above the regular expense of running your business. This coverage should also pay for recovering and or duplicating your backup files and may cover the cost of immediate rental of an office trailer to keep on site. To figure out this coverage, provide your agent with the cost of six to 12 months of your rent and utilities.
5. Loss of income: If you have a loss and your operations cease, Nemshick says, you will lose income. If you include this type of insurance in your coverage, you’d be able to have income to keep the company going. The insurance company usually brings in an accountant to review your finances to determine the amount.
Public Relations
Another aspect of dealing with an emergency or trauma is handling the media and public relations. In her book, PR Power Public Relations for Building Pros, public relations consultant Kathy Ziprik advises companies about dealing with a crisis. She says that builders can be faced with crises such as a fire on a building site, an employee accident, product issues, weather-related damage, disgruntled employees, etc. And that all building companies should have a documented plan for these types of issues. These tips are from Chapter 9: Planning for a Crisis:
- Having a well-practiced crisis plan in place allows you and your management team to have some level of control over the results of a crisis. In the face of a tragedy, a crisis plan acts as a security blanket of knowledge, giving you the confidence to work through emotions, confusion, and an extraordinarily difficult situation.
- Designate a spokesperson. During a crisis situation, the credibility of your company may be at stake. It is extremely important that the top-ranking person at your company serve as the spokesperson during a crisis. A crisis situation is not the time to practice at being a spokesperson. Make sure to prepare, train, and rehearse the spokesperson or team.
- Distancing the company from the situation and saying “no comment” are two of the most dangerous reactions a company can have to a crisis. This is the time for builders to put a human face on their company, to express their compassion and concern over the crisis situation.
Tips for media interviews:
- Tell the reporter you will call back in 15 minutes, and use the time to get prepared for his/her questions.
- Return the reporter’s call within the timeframe you promised
- Be quotable for the reporter
- Use the interview as an opportunity to meet your agenda and put forth your important points, not just answer the reporter’s questions.
- Speak clearly and plainly. Eliminate industry jargon.
- Be honest and open. If you don’t know the answer to something, tell the reporter.
- Stay in control of the interview.
- Ask the reporter to call you back to confirm your quoted comments.
More Information
The Internal Revenue Service provides tips for small businesses on preparing for disaster. For a story on this information and a link to the IRS site, go to the story Disaster-Planning Tips