Earlier this month, we discussed the importance of emergency planning in our post, September is National Preparedness Month. Preparing for unexpected disruptions is important for businesses too, and a power outage is one of the more common events that can quickly affect day-to-day operations.
Power outages can happen with little warning. Severe weather, equipment failures, accidents, utility problems, and other events can leave a business without electricity for minutes, hours, or even days.
While a short outage may be little more than an inconvenience, a prolonged loss of power can affect communications, payment systems, refrigeration, security systems, computer equipment, and normal business operations. Preparing ahead of time can help your business respond more effectively when an outage occurs.
Create a Business Continuity Plan
Start by identifying the operations your business depends on most. Consider which systems and processes would be affected immediately if electricity were unavailable.
Your plan might address how employees should respond, who has authority to make decisions, how customers will be contacted, and whether certain operations can continue from another location or remotely.
Keep copies of important contact information available somewhere that does not depend on access to your normal computer network.
Identify Critical Equipment and Systems
Make a list of equipment that is essential to your business. This may include computers, servers, security systems, refrigeration equipment, manufacturing machinery, phone systems, point-of-sale devices, or medical equipment.
Consider what would happen to each system during an outage and what steps may help reduce the chance of damage or data loss.
Uninterruptible power supplies, surge protection, battery backups, and properly configured shutdown procedures may provide additional time to safely shut down certain equipment.
Consider Backup Power
Some businesses use portable or permanently installed generators to maintain essential operations during an outage. The appropriate backup power solution depends on the type of business, building, electrical system, and equipment involved.
Generators should be installed and operated according to manufacturer instructions and applicable safety requirements. Improper generator use can create fire, electrical, and carbon monoxide hazards.
Businesses that depend heavily on refrigeration, climate control, communications, or other electrical systems may want to include backup power needs in their emergency planning.
Protect Your Data
A sudden outage can interrupt computer systems and potentially cause lost or corrupted data.
Regular backups can help reduce the impact of equipment failures or unexpected shutdowns. Depending on your operations, backups may be stored off-site, in secure cloud services, or through another system that remains accessible if your primary location is unavailable.
It is also important to periodically verify that backups can actually be restored.
Prepare for Communication Problems
Power outages can affect landlines, internet connections, email systems, and cellular networks.
Establish an alternate way to communicate with employees and key contacts. Keep important phone numbers available outside your primary computer system, and determine how customers should receive updates if your business must close or change its hours.
Your website, social media accounts, voicemail, and email notifications may also be useful for communicating temporary changes when those systems remain available.
Plan for Employee and Customer Safety
Emergency lighting, clear exit routes, flashlights, first-aid supplies, and accessible emergency procedures can become especially important during an outage.
Employees should understand what they are expected to do if power is lost. Depending on the nature of the business, this may include shutting down equipment, helping customers leave safely, securing the property, or contacting management.
Avoid using candles or other open flames as emergency lighting.
Think About Refrigerated or Temperature-Sensitive Property
Restaurants, grocery stores, medical offices, and other businesses may have inventory or materials that require refrigeration or controlled temperatures.
Include these items in your outage plan. Consider how temperatures will be monitored and what procedures employees should follow if an outage lasts longer than expected.
Keep records of damaged or spoiled property if a loss occurs. Photographs, purchase records, inventory information, and other documentation may be useful when reviewing a potential insurance claim.
Review Your Commercial Insurance
A power outage is also a good reminder to review your commercial insurance and understand how different types of losses may be addressed.
Depending on the policy, circumstances, cause of the outage, and coverage selected, commercial property insurance may help cover certain damaged business property. Other insurance, such as equipment breakdown or business income coverage, may help address specific losses associated with equipment failures or interruptions to business operations.
Coverage varies significantly by policy and insurer, and exclusions, deductibles, waiting periods, and coverage limits may apply.
Keeping an updated inventory of business property, equipment, and important records can also make it easier to document a loss if one occurs.
Prepare Before the Power Goes Out
The middle of an outage is not the ideal time to determine how your business will respond. Reviewing emergency procedures, protecting important data, identifying critical equipment, and planning how you will communicate can help your business respond more efficiently when electricity is unavailable.
It is also worth periodically reviewing your insurance as your business changes. New equipment, expanded operations, additional locations, or changes in inventory can affect your insurance needs.
If you have questions about your current commercial insurance or how changes to your business may affect your policy, contact Nicholson and Associates Insurance.
Frequently Asked Questions:
Does business insurance help cover losses caused by a power outage?
It depends on the cause of the outage, the type of loss, and the coverage included in the policy. Commercial property, equipment breakdown, or business income coverage may help cover certain losses in some situations. Nicholson and Associates Insurance can help you review your current policy and explain how your coverage may apply.
What should a business in Olympia, Washington do before a power outage?
Businesses in Olympia, Washington can prepare by identifying critical equipment, creating a communication plan, maintaining data backups, keeping emergency supplies available, and establishing procedures for safely shutting down operations. Backup power needs and insurance should also be reviewed as part of the business's emergency planning.
Can business interruption insurance help if a power outage forces my business to close?
Business income or business interruption coverage may help cover certain lost income and continuing expenses when a covered loss causes operations to stop or be reduced. Coverage depends on the policy language and the cause of the interruption. Nicholson and Associates Insurance can help you review the coverage included with your commercial insurance.
