Membership in the Academy of Insurance is an agreement for you who want to learn how the insurance product should work. Members of the Merlin Law Group regularly schedule classes to learn how the insurance industry thinks about its business and products. Claims industry professionals should join the Insurance Academy and learn from its course offerings.
For example, Patrick Wright will be doing this course presentation this afternoon:
Pay the bills after the storm
What is more difficult for a business? The roof blows off (or burns off) or the lost income in the three months it takes to replace it? Cash is the lifeblood of a business and when there is an asset loss, the business often cannot function properly to generate income. That̵7;s where Business Income cover comes in.
First comes a storm or a fire that damages the insured’s building. That’s where the building and personal property coverage form begins to get that building repaired and back in business.
But what about the money they couldn’t make while the doors were closed?
That is the area of the Business Income coverage form. In this session we will discuss the business income and incidentals coverage form, what it is for and how it can help the insured stay in business while they wait for building repairs.
At the end of this session, participants should be able to:
Recognize the insured’s need for Business Income coverage.
Determine the losses that the Business Income and Extra Expense coverage form covers.
Analyze the requirement for co-insurance and how an insured can avoid having to deal with it.
I have done similar presentations on business income coverage. Business income coverage is critical for businesses that go out of business after a storm.
The current claims problem is that many insurance companies think about the loss of business income months after the storm and focus on property damage calculations. Fourteen years ago I entered Business Interruption and Extra Cost Insurance are the most important commercial insurances – and often the most overlooked at the point of sale and adjustment:
Insurance agents need to do a better job of convincing commercial policyholders to buy business interruption and supplemental expense coverage. Insurance claims managers need to do a much better job and pay these benefits much faster than they usually do. These two activities would help many more commercial facilities remain in business after a disaster.
Do any insurance companies have their own adjusters who determine the amount of business income or extra expense coverage is owed? Virtually everyone hires external consultants and accountants to make the decision. Most adjusters wait weeks or months after a disaster to let these consultants and accountants do the work of evaluating the income and expenses of a business after a disaster. As a result, most business income and extra expenses are delayed at the most crucial time after a disaster. Months, rather than days, are the normal sequence for evaluating and paying time element losses.
Businesses need business income and extra cost coverage. Cash is like blood to a business. The insurance industry needs to do a better job and immediately pay income and extra expense benefits before the insured business dies from lack of cash.
Don’t let your mouth write a check your tail can’t cash.
– Bo Diddley