Who Needs Business Catastrophic Insurance?

The devastation office is crushing enough when property has been destroyed -- but infinitely more expensive when business records are involved. Destroyed materials such as customer ledger sheets, expense vouchers and canceled checks can seldom be replaced. When replacement is possible, thousands of man-hours and dollars are involved in reassembling records and replacing documents.

When such materials are lost, it is often a matter of pure neglect. You're not such a person, you claim. Don't be too sure. For your own information, answer the following questions.

What are the chances of catastrophic fire occurring in your business premises? Would the loss of customer records cause you serious economic hardship? What steps are you taking to prevent such an occurrence?

One rather expensive solution would be to photocopy or microfilm records and store them off the premises. To handle the matter this way, you must first make a comprehensive survey of your business operations to determine which of your records are in use and in storage; how they are being handled during the day; how they are handled for storage during the night; what records are taken off the premises; whether it would be necessary to replace these records; what the cost of replacement would be and the monetary loss involved for records which could not be replaced.

Use This Checklist

1. Know exactly where they are kept during and after office hours.

2. How much would it inconvenience you if papers such as customers records, etc. were destroyed? Could this cause serious financial loss?

3. How safe are your receptacles for record storage? Do they carry an underwriter's seal for one, two, three or four hours to fire exposure? Or are they unlabeled?

4. Do you consult with your staff periodically regarding the updating of controls to safeguard valuable papers?

5. Are you and your employees in the habit of leaving records exposed to possible loss by not putting all records into fireproof receptacles after business hours?

6. Arc you duplicating valuable records and storing them away from the premises?

7. Do you have a safeguard plan? Do you check occasionally to be certain that once copies of valuable papers are made, they are properly dispatched to your outside storage facility?

8. How much time lag exists in duplicating records for outside storage or safekeeping?

What is the Alternative?

You can purchase an insurance policy tailored for such situations. One of our professional representatives can check with casualty companies to locate low-cost coverage which should compensate you adequately for the loss of valuable papers. Insurance might be necessary on some items and not on others -- or not at all. It may well be that nothing more than better paper handling procedures are required. If you do decide to buy insurance, your valuable papers (but not cash or securities) can be insured against "all risk" on:

(a) a blanket basis with the amount of insurance purchased available to meet the expenses of reconstructing the missing, damaged or destroyed records;

(b) a scheduled basis with specific dollar amount(s) assigned to the item(s) insured; this will be the amount paid in case of loss; or

(c) a combination of these two methods.

Exactly what does a valuable paper insurance policy cover? The insurance company will pay you for the costs (investigation, redevelopment, research, labor, and so forth) of reproducing records which have been destroyed, damaged or lost. Where reproduction is not possible, payment will be made for the agreed value as specifically listed in the schedule. It should be noted that, while an insurance company could replace scheduled items at its option, this is rarely done. The insurance company could exercise its privilege if a scheduled amount of insurance turned out to be excessive, and if the item(s) somehow or other could be reproduced.