The Academy of Insurance membership is a deal for those wishing to learn how the insurance product is supposed to work. Members of Merlin Law Group regularly schedule classes to learn how the insurance industry thinks about its operations and products. Professionals in the claims industry should join the Insurance Academy and learn from its course offerings.

For example, Patrick Wright is going to make this course presentation this afternoon:       

Paying the Bills After the Storm

What’s harder on a business? The roof blows off (or burns off) or the lost income for the three months it takes to replace it? Cash is the life of a business and when there’s a property loss, the business often can’t operate properly to generate income. That’s where Business Income coverage 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 kicks in to get that building repaired and get the business back up and running.

But what about the money they couldn’t make while the doors were closed?

That’s the realm of the Business Income coverage form. In this session, we will discuss the Business Income and Extra Expense coverage form, what it is for, and how it can help the insured to stay in business while they are waiting on the building repairs.

By 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 coinsurance requirement and how an insured might avoid having to deal with it.

I have made similar presentations about business income coverage. Business income coverage is crucial for businesses shut down after a storm.

The current claims problem is that many insurance companies think about the business income loss months after the storm and focus on the real property estimates of damage. Fourteen years ago, I wrote in Business Interruption and Extra Expense Insurance are the Most Important Commercial Coverages–and Often the Most Overlooked at Point of Sale and Adjustment:

Insurance agents need to do a better job convincing commercial policyholders to purchase business interruption and extra expense coverage. Insurance claims executives need to do a far better job paying those benefits much quicker than they typically do. These two activities would help many more commercial establishments remain in business following a catastrophe.

Do any insurance companies have their own adjusters determine the amount of business income or extra expense coverage is owed? Virtually all hire outside consultants and accountants to make the determination. Most adjusters wait weeks or months following a disaster to have these consultants and accountants do the work of evaluating the income and expenses of a business following a disaster. As a result, most business income and extra expense benefits are delayed at the most crucial time following a disaster. Months, rather than days, are the normal sequence for evaluation and payment of time element losses.

Businesses need business income and extra expense coverage. Cash is like blood to a business. The insurance claims industry needs to do a better job promptly paying income and extra expense benefits before the insured business dies from a lack of cash.

Thought For The Day        

Don’t let your mouth write a check that your tail can’t cash.

—Bo Diddley