The no-exclusion insurance policy

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The no-exclusion insurance policy

By Anna MaskerIn standard7th November, 2012

As much of the Northeast recovers from Hurricane Sandy, our thoughts go to everyone affected. As power is restored and businesses slowly reopen this week, many are digging out their insurance policies to see what damages are covered.

After the shock and aftermath of a natural disaster of this magnitude, many business owners are also shocked at the exclusions contained in their insurance policies. In many cases what they thought was covered, wasn’t. For those items covered, there may be a lengthy claims process until the much-needed money arrives.

There is one insurance policy that has no exclusions and has no long claims process:

It’s called cash reserves.

Cash reserves bridge the gap between the time a loss occurs, and the time the insurance company reimburses you. That could take weeks, months or even a year. It doesn’t exclude certain expenditures; it can be used to buy meals for displaced workers or to make necessary repairs or emergency provisions to keep operating.

An estimated 25% of businesses never reopen their doors after a major disaster, according to the Institute of Home and Business Safety. Whether it is due to inadequate insurance coverage, or the financial resources to rebuild, many business owner’s life’s work ends with the disaster.

So what are cash reserves? Ideally it is cash sitting in your bank. It can also be available credit on a line of credit. It should be easy access to cash when you need it. Cash reserves are not meant to cover major expenditures, but they will help cover the gap to make some general repairs or rent temporary office space to start getting you back into operating condition.

So in the aftermath of this storm, think about building your own no-exclusion/ no claims insurance policy. Having a cash management strategy is the best insurance policy you and your business can have.

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