Natural Disasters: Can Your Practice Survive?

By Sylvia A. Ezenwa, JD

On August 29, 2005, Hurricane Katrina made landfall and devastated our nation's Gulf Coast region. Congress immediately allocated billions of dollars to the affected states for debris cleanup and removal, restoration of public utilities, and repair of highways, bridges, and other critical infrastructure.

But who will pay to repair damaged homes and businesses of area residents? If Katrina taught us anything at all, it is that governmental bureaucracy may slow the response of federal, state, and local authorities to a natural disaster, which places the onus on individual residents to assume primary responsibility for the safety and security of their families, homes, and businesses. This means that it is your responsibility, as an orthotic and prosthetic practitioner or facility owner, to ensure that your practice is adequately prepared for a disaster. Can your practice survive a hurricane, flood, fire, earthquake, or other catastrophic event caused by nature? This article helps you develop a disaster plan that will make it easier for you to answer, "Yes."

How to Develop a Disaster Plan

There are three critical components of any good disaster plan: (1) preparedness, (2) recovery, and (3) insurance protection.

(1) Preparedness

How well prepared your practice is for a disaster depends on the steps you take before the event to reduce the risk of fire, wind, flood, and seismic (i.e., earthquake) damage to the building in which your practice is located.

To reduce risk of fire damage:

• Locate your practice in a fire-resistant building, i.e., one made of non-combustible materials, with fire walls to hamper the spread of flames;
• Install a fire alarm that will alert the local fire department in case of a fire;
• Install fire extinguishers and smoke alarms, and test them regularly;
• Hire an electrician to look for and repair faulty wiring;
• Store flammable chemicals (e.g., alcohol) in a locked, fireproof storage cabinet that is clearly marked "flammable," and ban smoking nearby.

To reduce risk of wind damage:

• Locate your practice in a building that conforms to the wind-resistance standards in applicable building codes.

To reduce risk of flood and seismic damage:

• In a flood plain or other flood-prone area, locate your practice in a building that conforms to the flood-resistance standards (including water-resistant flooring, wall and ceiling materials) in applicable building codes. Likewise, in an earthquake-prone area, locate your practice in a building that conforms to seismic-resistance standards in applicable building codes. (For information on flood maps and preparedness, visit the Federal Emergency Management Agency [FEMA] website at www.fema.gov/index2.shtm [last accessed October 2, 2005]).

(2) Recovery

How well your practice recovers from a disaster depends on the steps you take before the event to find an alternate practice location, and safeguard business records, medical and general office equipment, and other contents of your practice.

To safeguard business records:

• Convert paper records (via copying and scanning) into electronic records;
• Routinely backup electronic records. Use active computer files for temporary storage, and removable media (e.g., backup tapes and CD-Rom) for archival or long-term storage; and store archival media in a secure location off-premises;
• Store original financial and insurance records (e.g., tax returns, commercial leases, business insurance policies, and bank statements) in a fire-resistant safe on the premises, and duplicate copies in a bank safe deposit box or other secure location off-premises.

To find alternate office space and equipment:

• Contact O&P practitioners and facility owners in nearby communities about sharing office space (and perhaps, support staff and general office equipment) temporarily while your original location is being repaired or rebuilt;
• Contact local media outlets about their protocols for alerting residents about a business closure or alternate practice location;
• Contact vendors and suppliers of used and rental office equipment, including computers, laser printers, copiers, and other big-ticket items, about product quality, pricing, availability, and leasing arrangements;
• Establish relationships with several medical equipment suppliers, so that you will have other dependable sources of product if your primary supplier cannot make a scheduled delivery.

To compile a survival kit:

• Keep a survival kit on the premises that contains first-aid materials; flashlights and batteries; candles, holders, and matches; non-perishable and canned food items, a knife or manual can opener, disposable plastic cutlery, and bottled water; a battery-operated radio or television; a cell phone; and cash;
• Keep basic tools and building supplies on the premises (e.g., hammer, nails, plywood, and duct tape) to make minor repairs in roofs, walls, and windows during a disaster;
• Keep a portable generator and several gallons of gasoline on the premises to supply electricity during a power outage.

To compile contact information:

• Keep a list of emergency phone numbers (e.g., federal and state emergency management agencies and personnel; local fire and police departments; area hospitals; and employees' home and cell phone numbers) both on and off-premises;
• Keep a list of business phone numbers (e.g., medical and office equipment vendors and suppliers, landlord, insurance companies, banks, patients, and other customers) both on and off-premises.

(3) Insurance Protection

Whether your practice can be repaired or rebuilt, and its contents, including business records, medical and general office equipment replaced, depends on the steps you take before a disaster to obtain adequate insurance protection or coverage.

Selecting a policy

Small- and mid-sized practices should consider purchasing a business owners insurance policy. Business owners insurance policies (BOPs) are "package" policies that combine protection against the risks of both property damage and liability in a single policy. Meanwhile, larger practices should opt for separate property and liability policies, so that each policy can be tailored towards the specific, and usually greater, risks associated with running a large operation.

BOPs generally include the following kinds of insurance cov-erage:

(i) Property insurance

Property insurance will pay to repair or replace any physical damage to a building and its contents that was caused by a covered disaster. However, not all disasters are covered. Flood and earthquake damage are usually excluded from property insurance policies. So if your practice is located in a flood plain or other flood-prone area, consider purchasing separate flood insurance from the National Flood Insurance Program. (For information on flood insurance, visit the FEMA website at www.fema.gov/fima/nfip.shtm ). Likewise, if your practice is located in an earthquake-prone area, consider purchasing either separate earthquake insurance, or a commercial property earthquake endorsement, which will add earthquake coverage to your property insurance policy for an additional premium. But regardless of where your practice is located, you should consider purchasing an Ordinance or Law endorsement, which will add to your property insurance coverage for extra costs incurred in demolishing a building and reconstructing it to conform to new or updated building codes.

(ii) Business interruption insurance

Business interruption insurance will reimburse the income lost when a business shuts down as a result of physical damage caused to its original location by a covered disaster. Just as with property insurance, income lost from damage caused by floods and earthquakes is usually not covered. "Business income" refers to the profits that would have been earned had the damage not occurred, plus operating expenses (e.g., electricity and payroll) which have continued despite the temporary shutdown. Business interruption insurance also will reimburse extra expenses, over and above usual operating expenses, incurred in continuing to operate out of the original location, or in operating from an alternate location, during the repair and rebuilding period. Finally, it is important to purchase enough business interruption insurance to sustain your practice for more than a few days after a disaster; and there may be a 48-hour waiting period before coverage is slated to begin.

(iii) Liability insurance

Liability insurance will pay the litigation costs (e.g., damage awards, court and attorney's fees) incurred by a business when a visitor to the premises suffers bodily injury or property damage as a result of a dangerous condition or defect on the premises. For example, a bodily injury suffered by a salesman who slips on a wet floor is covered by liability insurance. But what is not covered are bodily injuries caused by defective orthotic and prosthetic devices (product liability) or an O&P practitioner's negligent or improper fitting of such devices (professional liability); you need to purchase separate product liability and professional liability insurance policies to cover these situations.

Updating a policy

Review your business owners insurance policy bi-annually, and update the coverage amounts when necessary. For instance, increase your property insurance coverage when you make any major alterations to your building or practice, or purchase any new medical or general office equipment; and increase your business interruption insurance coverage when your practice experiences sudden growth, resulting in increased profits and operating expenses.

Conclusion

In the aftermath of a natural disaster, many damaged businesses shut down and never reopen. By developing and following a disaster plan, your practice will likely avoid a similar fate.

References

Insurance Information Institute, www.iii.org/individuals/business (last accessed October 2, 2005); and www.iii.org/media/publications/brochures/bizcatastrophe (last accessed October 2, 2005).

Copyright 2005 Sylvia Ezenwa. Reproduction of any portion of this article in any form is prohibited without the expressed, written consent of the author.

Sylvia A. Ezenwa is a lawyer, author, and freelance writer based in Superior, Colorado. She writes regularly on a variety of legal topics for trade and consumer publications. She is licensed to practice law in the State of Texas.

	Protecting O&P Companies from Product Liability - August 2006 Legal EDGE
	Minimizing the Risk of Workplace Litigation - February 2006 Legal EDGE
	After a Disaster: Filing a Business Insurance Claim - January 2006 Legal EDGE
	An Electronic Record Retention Policy: No Longer A Luxury - November 2005 Legal EDGE
	The Cost of Destroying Electronic Records - October 2005 Legal EDGE

Table Of Contents - December 2005

	O&P Community Rallies Support for Katrina Victims In the wake of Hurricane Katrina, many in the O&P field have offered financial assistance, support, and relief to the victims of what has been called the greatest natural disaster the US has ever faced. Feature
	Prosthetist/Orthotist Rescues Animals from Katrina Disaster A well-known member of the O&P community, Ronnie Graves, CO, BOCPO, LPO, RTP, heroically assisted in the rescue of hundreds of animals in Mississippi. Feature
	Pedorthics: Helping People Get Back to Work Not every pedorthist faces a first-time workers-compensation case like this one! Stepping Out
	Natural Disasters: Can Your Practice Survive? Legal EDGE
	Karl Fillauer: Passionate about O&P Industry Leader
	Hans Richard Lehneis, PhD, CPO, Passes Industry Insight
	Got FAQs? Got FAQs?
	Luci Busch, RTP Profile
	Please Don’t Shoot the Messenger Perspective
	From the Editor: New Managing Editor Joins The EDGE Viewpoint