The importance of adequate insurance coverage for a small business is best demonstrated by knowing what has happened in Queensland Australia in the month of January 2011. Queensland Australia so far this year has been devastated at first by floods and lastly by a tropical cyclone measured at a category 5. A category 5 is the highest rating for a cyclone/hurricane around the world. In the northern hemisphere these events are called hurricanes and in the southern hemisphere they are called cyclones. Can you imagine how those small businesses must be reeling if they weren't covered by adequate insurance?
Many of them will simply be going out of business and having to declare bankruptcy. The cost to the Australian economy has been horrendous and is still so far unquantifiable. The importance of adequate insurance coverage in a small business cannot be over-stated.
None of those Queensland business did anything wrong apart from not being adequately insured; but through no other fault of their own, they will now lose whatever the tropical cyclone named Yasi will have left them of their house or business. The Queensland floods at the beginning of January 2011 wiped out all kinds of small businesses. Agricultural businesses to Finance brokers, Horse racing stud farms to exclusive little boutique food restaurants to retailers of other fashion goods.
The floods alone washed away up to 1% of Australian GDP and the impact of Cyclone Yasi has not yet been able to be assessed simply because the authorities are only now being able to reach some of those smaller communities. Those smaller communities were all serviced by a number of small businesses selling or providing the essential services to their local community.
Now many of them will simply walk away from those communities with nothing because they weren't insured and the cyclone has blown their business away. Most of these small rural townships were located along the easter n coastline of Queensland where cyclones are a yearly event but none ever with the power and fury that Yasi hit them with.
Along with the strong winds and tornado-like eddies in the cyclonic winds, the cyclone hit at high tide, so this increased the damage to the point of absolute carnage as many of these small businesses were located along the beachfront. No one knows when these catastrophic weather events are going to happen.
If you are in a business, large or small, the importance of adequate insurance coverage cannot be stated strongly enough. Any small business in a known area for fire, flood or cyclones or any of the other major life-changing events that can happen, and who opt to gamble that they won't be affected by something or other in order to save an annual insurance bill, takes a far bigger risk than they realize. Yasi proved that this week.