Is it or isn’t it? The first thing to understand is what really is covered by your insurance and how such insurance would be applied as part of your disaster recovery or business continuity plan. The mistake made by organisations, and small businesses in particular, is in assuming that their insurance covers everything. Insurance policies may include general coverage for different aspects of an organisation, but will not necessarily cover specific aspects that are vital to particular operations. They may be complex to read or expensive to buy, meaning decisions are either taken without sufficient consideration, or are continually put off till later. And that’s before getting to the question of how soon insurance claims will be met after a disaster.
A number of insurance companies recognise the need to insure against not only damage to property and equipment, but also against business interruption. Organisations in disaster mode still need to pay bills on time if they are to survive financially and business interruption insurance can be a crucial part of a continuity plan. It has to cover the revenue you lose if a disaster puts your business temporarily out of action. It also has to be specific enough to suit your particular business or activity, and not only be correlated with estimated expenses and profits, but also last long enough to give you enough time to regroup and restart.
Yet the same insurance companies also know that forward thinking with a business continuity plan can be beneficial in two ways. Operationally, knowing how you’ll cope can significantly increase your chances of survival as an organisation, taking into account also that there will necessarily be some time lag until the insurance company can assess your claims. Financially, a good stand-alone BC plan can help keep insurance premium prices down by reducing the total exposure to the insurance company for compensation to be paid out.