Do You Have Enough Insurance Coverage for Disaster and Crises?

This may seem like a simple question. But the answer must be nuanced. Ultimately it comes down to your tolerance for risk, how much risk you want to transfer through insurance, and how much you are willing to retain or mitigate.

No single insurance policy can cover every bad thing that might happen to your business. But a combination of policies can cover a broad range of hazards, including region-wide earthquakes, structure fires, cyber-attacks, power outages, and stolen laptops. An important first step is to contact your agency representative to help you prepare for the risks you face and to understand the best combination of coverage to fit your business—be it a solo practice, mediumsized clinic, or a hospital.

Your standard Business Owners Policy(BOP) is a combination of common Property and General Liability coverages.On the property side it provides protection if your office is damaged by a fire, explosion, burglary, broken water line,or other covered peril. Coverage can be broadened by adding additional limits or enhancement endorsements. Spoilage of perishable items, such as medications or vaccines, is an important example of a coverage enhancement. The policy can protect you from the loss due to a power failure or mechanical breakdown of your equipment. If you have large quantities of perishable medicine, it’s important to talk with your agent to make sure your spoilage  limit is adequate.

Have you thought about what you would do if a fire damaged your building and you were unable to see patients? Business income coverage is built into your Business Owners Policy. The standard policy includes up to 12 months of lost business income due to suspension of your operations from a covered loss. The policy also includes the extra expense you would incur getting your operation up and running at a temporary location. If you haven’t addressed this unfortunate but very possible scenario, having a conversation now about Extra Expense coverage and how to respond to a disaster will help you get your doors open sooner when the unexpected happens.

In the Pacific Northwest, the threat of a major earthquake is also a very real possibility. Earthquake coverage is excluded by almost all BOP policies. This must be purchased separately and includes specific underwriting to your location and the construction of your building. Even if you don’t own the building, you can purchase earthquake coverage to cover your contents and your loss of income. Cyber Liability is a rapidly evolving area of risk management.

As covered in “Health Care an Increasingly Common Ransomware Target”, data hacks are a very real threat to clinics and hospitals of every size, and now a number of options are available to fit your needs. For smaller clinics, many companies are now offering small limits of cyber coverage as a coverage enhancement to a BOP.

For larger clinics, a number of dedicated cyber insurance products are available to cover such items as your first-party costs associated with handling a breach, thirdparty liability for unauthorized access to patient information, regulatory fines, and even cyber extortion coverage. Contact your agent to determine which level of coverage is right for you.

Many different risks are out there. From the major earthquake to the minor-butstill- disruptive burglary, the best bet is to work with your agent before disaster strikes to ensure that your business not only survives but also makes a full recovery.

For more information on insurance exposures in large and small disasters and crises, contact Reid Ekberg, President, Pilkey-Hopping & Ekberg, Inc., rekberg@pheinsurance.com, 253-284-9343. Or Janet Jay from Physicians Insurance at janet@phyins.com, 800-962-1399.