Disaster recovery plan

Always be prepared; make a plan for a disaster


What is a disaster recovery plan?

In a business context, a disaster recovery plan is a well-thought-out strategy to get your business back up and running if it has to close because of a natural or human-induced disaster. In other words, when disaster strikes, you’ll be ready to pick up the pieces.

Why do you need a disaster recovery plan?

Also known as a business recovery plan, a disaster recovery plan involves more than just purchasing insurance — though that is one critical component. A good disaster recovery plan is highly detailed and practical, clearly and concisely outlining what needs to be done to get your business back on its feet.

While there’s no way to lower the risk of a natural disaster (if only!), developing a comprehensive disaster recovery plan can limit your losses during the time you have to be closed and help you get your doors open quickly.

How to develop a disaster recovery plan

A good disaster recovery plan looks at what needs to be done before, during, and after a disaster in order for your business to recover as quickly as possible.

Before a disaster:

  • Compile important contact information. You don’t want to scramble for important information after a disaster hits. Be sure to include your local emergency services, major clients and customers, suppliers, lenders, and your insurance.
  • Duplicate and backup records and data. Keep up-to-date duplicates of all your important records, contracts, and documents off-site. You can opt for old-school methods and store them in a safe deposit box or use one of the many tech solutions that provide secure, continuous backup in the cloud.
  • Review your insurance. Ensure that there aren’t any gaps in your small business coverage. For example, most policies don’t cover flood or earthquake damage, so consider if you need to purchase these separately.
  • Source qualified contractors. After a natural disaster, everyone will need help rebuilding. Try to get an advanced commitment from at least one contractor, so you know you’ll have help when its needed.

During a disaster:

  • Have an emergency response plan. Ensure your employees know what to do to keep themselves and your customers safe when disaster strikes. In addition, once they’re in a safe location, they should know whom to notify about what has happened.
  • Protect your business. Once everyone is safe, know what you’ll need to do to protect your business. Can you move goods to a higher floor during flooding? If you lose power, will you need backup power to keep freezers or refrigerators running?
  • Check-in with your community. Disasters affect everyone, some more than others. Maybe someone’s in danger of having their inventory ruined and you have extra storage space. Or you need to get online, but your internet isn’t working and your neighbor’s is. By keeping in touch, you can help each other out to solve these problems and more.

After a disaster:

  • Communicate with customers. Use every method you’ve got — post a note on the front door of your shop, call clients on the phone, and regularly update social media. This way, you can inform your customers of how your recovery is going and alert them when you’re ready to reopen.
  • Start rebuilding. If possible, find an alternative location to start working while your business is being repaired.
  • Report losses to the Small Business Association (SBA) if needed. Hopefully, your insurance coverage will get your business back and running, but if you find yourself short and your business is in a declared disaster area, The Small Business Administration offers loans of up to $2 million to repair or replace damaged or destroyed real estate, machinery or equipment, and inventory.

Insurance for disaster recovery

A crucial part of a disaster recovery plan is reviewing your current insurance policy.

Many small businesses may have business personal property insurance (BPP). BPP is great because it covers everything you need to run your business except the building itself, which the owner should cover. This includes equipment, inventory, and any upgrades you’ve made to the space, like custom lighting.

However, as repairs are being made and paid for by BPP, every day you’re closed, you’re losing money. That’s where business interruption insurance comes in.

Business interruption insurance (also known as business income insurance) helps cover the revenue you would have earned if you were open. It can also pay for ongoing business expenses to keep your business running.

So not only does business income insurance cover the profits you’re losing while closed, it can help pay for a temporary location to continue work while repairs are being done. In addition, it can help pay for things like property taxes, bills, and even training on new or different equipment while your primary equipment gets repaired or replaced.

No location is immune to disasters, but having a well-thought-out and organized disaster recovery plan can limit the damage and ensure your doors will open again quickly.

How NEXT helps small businesses get back open quicker

NEXT offers small business owners 24/7 access to manage their policies and file an insurance claim any time, day or night. In fact, most claims are resolved within 48 hours so you can focus on getting back to business.

You can start a quote, customize your options and access your certificate of insurance online immediately — in about 10 minutes.

Start your instant quote today.

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Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.
General Liability insurance
General Liability
Protect yourself from accidents that cause physical injury or damaged property.
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Professional Liability/E&O
Shield yourself from lawsuits that claim your work errors caused financial losses.
Workers' Compensation Insurance
Workers’ Compensation
Cover medical bills and lost wages if your employees have an accident at work.
Commercial Auto Insurance
Commercial Auto
Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.
Tools & Equipment Insurance
Tools & Equipment
Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.
Commercial Property Insurance
Commercial Property
Keep your building, inventory and equipment protected from fire or water damage.
Business Owner’s Policy Insurance
Business Owner’s Policy
Combine general liability and commercial property into one policy to protect your business.
* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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Any starting prices or premiums represented before an actual customer quote are not guaranteed and are representations of existing premiums of active policies as of December 6, 2023. To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.