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About Marsh & McLennan Agency LLC:
Marsh & McLennan Agency LLC is a wholly
owned subsidiary of Marsh and the 12th
largest insurance brokerage firm. The agency
provides insurance and financial solutions to
middle-market businesses.
For more information, visit
marshandmclennanagency.com
or contact Kim Keating at 201.336.1344.
Flood Insurance – Not Just for
Businesses in Flood Zones
unlike most other storms, Hurricane irene’s damage
extended to regions outside of designated flood plains,
catching these businesses by surprise, and in many
cases without flood insurance. “Companies located in
non-designated flood areas that have foregone flood
insurance through the federal National Flood insurance
Program, should reconsider their decisions,” says
Cilente. “the monthly premium paid pales in compari-
son to a large loss that could be incurred by flooding.”
Companies can purchase the coverage through the
NFiP or through select commercial insurance carriers
on a primary, excess or difference-in-conditions basis.
there are drawbacks to the NFiP product. For
instance, NFiP policies are written on an “actual cash
value” basis, instead of “replacement cost,” and property
damaged from flooding inevitably will be depreciated.
NFiP also does not provide business interruption cover-
age. However, there are options, such as a difference-
in-conditions policy, excess flood, and/or inland marine
forms that provide limited business interruption cover-
age for flood, but these alternatives can be costly.
“since Hurricane irene, business inquiries for flood
insurance have increased, especially from businesses
affected by irene that are determined to protect them-
selves against future losses,” says meg errickson,
director of Claims for marsh & mcLennan Agency.
“However, there is a 30-day waiting period before such
coverage becomes effective; businesses looking to
protect themselves against flood damage caused by
winter storms should consider purchasing flood
insurance now.”
Business Interruption Coverage
Limited, Deductibles Costly
unlike large businesses, most middle-market
businesses choose to purchase standard business
insurance policies, which may provide business
interruption coverage on a limited basis and with
high deductibles. often, these policies exclude lost
revenue resulting from flooding. other issues include
long waiting periods before coverage is triggered.
“Your insurance broker can negotiate some issues,
like waiting periods, with your insurance carrier,” says
Cilente, “it is important to note that insurance is for cat-
astrophic events—not incidental claims—and a high
deductible, which can lower premium costs, can work
to your advantage.”
Business Continuity Plan Can Ease
Financial Losses, Business
Disruption
while all businesses should take a closer look at the
limits and conditions of their business interruption
policies and reconsider purchasing flood insurance,
there is another important lesson to be learned from
Hurricane irene: Business Continuity and disaster Plans
can limit the severity, scope, and duration of a business
disruption.
According to technology firm Gartner inc., only 35%
of small and medium-sized businesses have a disaster
recovery plan. Yet between 15% and 40% of businesses
fail after a manmade or natural disaster, as reported by
the insurance information institute.
“executive management teams need to be able to
answer the following question, ‘if we were to lose a
major facility tomorrow, how would we stay in busi-
ness?’” advises Cilente. “it can take you decades to build
a business and only an instant to lose it in a disaster. A
thoughtful business continuity and disaster plan, which
encompasses risk management, finance, operations,
facilities, human resources, sales, and communications,
can prevent this scenario from happening.”
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