FLORIDA/TEXAS—Life in the 21’st century has brought us all to an inevitable world of collaboration better defined as a global marketplace, on which many businesses depend on overseas suppliers. With that said, you understand that if your operations depend on the timely delivery of raw materials, parts or finished products from distant locations, then your business could be hurt when these goods are delayed or fail to arrive. Just look around and see what has happened to the auto industry, as an example. Homebuilders, are also being hurt with big delays and higher costs that when translated to the end buyer may easily represent some loss of business.
According to experts, it can take two years or more for a company to recover from a supply chain failure. Significant supply chain disruptions can reduce revenue, cut into market share, threaten production and distribution, inflate costs and ultimately affect a company’s bottom line.
When you run a global corporation or a small business, you need the proper insurance coverage to protect against supply chain failure.
Contingent Business Interruption Insurance
Also known as CBI, this type of insurance can protect your business against losses caused by disruptions at the locations of your suppliers or downstream customers. Although it is a limited type of insurance coverage because it only covers if the businesses you rely on are disrupted by physical property damage. It does not cover all perils, protect your business when roads are closed and/or either your employees or products cannot get to work or be distributed by your operation, or if other suppliers are affected. In such case, you maybe required to provide a list of suppliers, and the customer locations, you work with. You must keep up to date if you change suppliers, or you may not be covered if disruption occurs at any supplier/location not included in the list you provided.
You may need to consider additional coverage.
Supply Chain Insurance
Supply chain insurance is an option you may want to explore to cover disruptions caused by property damage to your suppliers’ or downstream customers’ businesses. This type of insurance can cover losses caused by a wide range of events like:
- Natural disasters.
- Industrial accidents.
- Labor issues.
- Production process problems.
- Political upheaval, war, civil strife.
- Riots or other disruptive civic action.
- Closure of roads, bridges, or other transportation infrastructure.
- Public health emergencies.
- Regulatory action.
- Financial issues.
Although insurance is an important component of managing your supply chain risk, there are other steps you may want to add to your loss mitigation strategy. For example, your business can also limit its exposure to supply chain risk by taking the following actions:
- Assess your supply chain and identify risks and weaknesses.
- Balance supply chain logistics (e.g., just-in-time delivery) with risk management.
- Identify back-up suppliers and vendors.
- Establish contingency plans and include supply chain disruption in your business continuity plan.
At Garzor Insurance we care about your business. Our experienced professionals are dedicated to providing commercial insurance in Florida as well as Texas, and now many other states across the U.S. If you also have questions about truck or other commercial vehicles insurance, or any other business insurance aspects, please do not hesitate to visit us online at Garzor Insurance, or you may want to call us directly at (321) 206-8035.
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