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Majority of U.S. small business owners have no disaster recovery plan or business interruption insurance: study


August 31, 2015   by Canadian Underwriter


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Three out of four small business owners in the United States do not have a disaster recovery plan, and more than half (52%) say it would take at least three months to recover from a disaster, according to a new survey by Nationwide, a diversified insurance and financial services organization.

Only 18% of companies with fewer than 50 employees had a disaster recovery plan

The 2015 Small Business Owner Study was conducted online within the United States by Harris Poll Online on behalf of Nationwide, a Fortune 100 company based in Columbus, Ohio. Released on Monday, the poll surveyed about 500 small business owners with fewer than 300 employees.

“Small businesses are least likely to have disaster recovery insurance,” said Mark Pizzi, president and chief operating officer of Nationwide Direct and Member Solutions, in a media release. “And yet they are the ones most affected by a disaster. That’s why it’s essential for small businesses to have a disaster recovery plan.”

According to the survey, one in four (26%) believed the likelihood of a natural disaster occurring in their area is slim. Just over one-third (37%) say climate change and the weather phenomenon El Nino have decreased the likelihood of a natural disaster impacting their business.

If a disaster were to occur, the study found, 44% of small business owners say they don’t have access to generators — and 66% don’t even have business interruption insurance.

Still, the gravity of the recovery from a natural disaster is not lost on small business owners, as an estimated 25% of businesses do not reopen following a major disaster, according to the Insurance Institute for Business & Home Safety.

Other survey findings included:

• While more than a third (38%) of small business owners say it is not important for their business to have a disaster recovery plan, over two-thirds (69%) have an evacuation plan at home;

• For many without a plan for their business, disaster recovery is a low priority (34%). Time (11%) or cost (15%) play little role in the decision not to have a written disaster recovery plan in place; and

• For companies with fewer than 50 employees, only one in five (18%) have a disaster recovery plan.


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