I gave a presentation about the Six P’s and Six E’s of business interruption coverage on my weekly Tuesdays at 2 With Chip livestream. I wanted to follow up on these concepts in today’s post. I will then go over each in smaller posts to break up the topic.
The Six P’s
The essence of the Six P’s is that Parties are insured for damage to Property caused by an insured Peril which results in an interruption of Productivity for a Period of time with a resultant loss of Profit.
The Six E’s
The essence of the Six E’s is that insureds may receive benefits to the Extent of the loss Experienced, not resulting from Excluded causes, and also for Extra expenses incurred, provided that Effort is made to reduce the loss and there is Enough insurance which was purchased.
Today, let’s go over Parties, which is usually the easiest and should be the P with the least coverage problems. Just read the policy to find out who the insured parties are to the contract. Then, make certain the parties have an insurable interest at the time of the loss.
With more complex policies, Parties can sometimes be described in the policy. This is especially true with businesses that have many corporations acting somewhat together and with governmental contracts that list various governmental entities by description.
When multiple Parties are listed or described, it is important to find out how the accounting, revenues, and expenses are recorded and treated. It can lead to multiple claims or consolidated claims. There can sometimes be disagreements about expense and revenue when somewhat closely held companies have different ownership groups and one party’s expense is another party’s revenue.
We will continue with other P’s later and hope you will review the livestream if you could not attend live.
Thought For The Day
A lifetime contract for a coach means if you’re ahead in the third quarter and moving the ball, they can’t fire you.