Insurance in Relation to Business Continuity and Disaster Recovery

The organization's insurance coverage should take into account the actual cost of recovery and should include coverage for media damage, business interruption, and business continuity processing. Mitigating the risk and impact of a disaster or business interruption usually takes priority over transferring the risk to a third party such as an insurer, but the organization should ensure that the amount of coverage will provide for the recovery of income and equipment in the event of a disaster. The amount of coverage as well as the items covered will vary depending on whom the organization has a policy with. There are two general types of insurance: property and liability.

Property Insurance

Property insurance can protect the organization from a wide variety of losses, including these:

• Buildings

• Personal property owned by the organization (tables, desks, chairs, and equipment)

• Loss of income

• Earthquake

• Flood (usually an additional rider on the policy)

Property insurance can be structured to cover computer equipment, software, and vital records, as well as the loss of income that would result from disruptions or disasters.

Liability Insurance

A general liability policy is designed to provide coverage for the following:

• Personal injury

• Fire liability

• Medical expenses

• General liability for accidents occurring on the organization premises

The organization must ensure that all costs associated with a disaster and the recoveries are included in its insurance policies. It might be necessary to purchase additional insurance policies to extend coverage (sometimes called umbrella policies) or purchase specific insurance coverage (flood or terrorism, for example) based on the needs of the organization.