Closed
Insurance

How to Minimize Business Interruptions

Risk management means expecting and planning for the unexpected. To maintain the safety of staff and patients and ensure the viability of your practice, you need to prepare for unforeseen disasters. These risks may include criminal activity, natural disasters, cyberattacks or terrorist attacks.


Any one of these threats could be serious enough to devastate your practice, but if you have a readiness plan in place, you can work to minimize their impact.

Business interruption insurance coverage provides resources that aid in recovery and can help get your practice back on its feet quickly.

Having a plan in place serves the following purposes:

  • To protect staff and personnel
  • To protect sensitive patient information
  • To protect revenue, assets and information
  • To prevent loss and to contain loss that occurs
  • To protect your reputation

Six Steps Reduce Business Interruptions

Here are six steps you can take to help minimize business interruptions:

1. Determine the Risk

When determining the potential risks for business interruptions, consider both environmental risks and human risks. Additionally, consider which risks are preventable and which are not.

Once the risks are identified, you can begin to understand all elements involved, such as the hazard itself, the assets at risk, the vulnerability to the risk and the ultimate impact of the risk. To prepare, rank each risk according to the likelihood of occurrence and the severity of impact.

2. Calculate the Cost of Interruptions

After the risks have been ranked, analyze the impact of each risk. In calculating cost containment, the following should be considered:

  • Lost sales or income
  • Increased expenses
  • Regulatory fines or contractual penalties
  • Delay of business

3. Understand Your Insurance Coverage

The next step would be to review your insurance coverage. Business interruption insurance generally comes into effect in the case of one of three circumstances:

  • Physical damage to the premises that cause suspended operations
  • Damage to property that is covered by the insurance policy and prevents patients or staff from accessing your practice
  • The government closes an area, due to property damage that is covered by the insurance policy, and prevents patients or staff from accessing your practice

Since business interruption coverage can differ significantly, it is important to understand the policy terms, such as exclusions, coverage limits and waiting periods. Coverage is provided for lost net income only for the duration of regaining operation.

4. Implement Steps for Prevention and Mitigation

There are three different approaches for controlling and containing potential hazards:

  • Prevention: This method identifies preventable hazards and implements steps to avoid occurrence of the hazards.
  • Deterrence: This method identifies potential criminal activities that create practice hazards. Steps are taken to prevent the criminal activities.
  • Mitigation: This method identifies hazards that cannot be prevented. Steps are taken to control and contain the hazards in case of an occurrence.

5. Create a Crisis Communication Plan

Create a crisis communication plan to provide staff and patients with updates and critical information. The communication plan should have the following:

  • Chain of command: A chain of command allows for information to be shared efficiently and for all staff to receive information.
  • Prescripted messages: Eliminate confusion by prescripting messages that will be shared with patients, staff and the public.
  • Bidirectional communication network: Allow for communication in multiple directions to efficiently pass information.

6. Prepare an Emergency Plan

An emergency plan should be prepared and ready to put in place before a hazard occurs. The plan should be practiced and reviewed to ensure its effectiveness. The plan should include the following elements:

  • IT and data recovery: Implement a data backup program to protect and recover important and sensitive information. Create a technology policy that assists in preventing data leaks in the case of telecommuting staff.
  • Contracts: Arrange written contracts with other businesses and external suppliers to continue fulfilling commitments to patients.
  • Resources: Prepare an inventory of resources that are essential to regaining the ability to continue to operate as a practice.
  • Test: Run a test of the plan to ensure its success.

By taking these six steps, it's possible to minimize potential hazards and limit the impact of hazards on your practice. Contact NCMIC Insurance Services today at 800-769-2000, ext. 8180, to ensure you have the right coverage in place.

Content Provided by Zywave


The information in the NCMIC Learning Center is offered solely for general information and educational purposes. It is not offered as, nor does it represent, legal or professional advice. Neither does this information constitute a guideline, practice parameter or standard of care. You should not act or rely upon this information without seeking the advice of an attorney familiar with the specific legal requirements of the state(s) in which you practice. If there is a discrepancy between the site and an insurance policy you have with NCMIC, the policy will prevail.