Understanding Business Income and Extra Expense

Transcription

1 Professional Insurance Agents of NC-Provider#: Instructor: Chris McLeod CPCU,CIC,ARM,AIM,AAI,AU,AIP,CRIS,AINS,CISR,CPIW Course #: Hours NC General CE Copyrighted material (07/2016) of the PIA of NC, No distribution or copying allowed without the express written consent of PIANC

2 What is Business Income Coverage? Disability Insurance for a Business

3 Why are Agents Reluctant to sell? Lack of Knowledge? Uncomfortable with the concept?

4 Direct vs Indirect Loss Property and most policies we write are direct coverage policies Business Income is Indirect a consequence of a direct loss

5 Income Coverage Basics 3 Forms Business Income Coverage form and Extra Expense Business Income Coverage Form Extra Expense

6 Income Coverage Definitions Operations (Continuing Normal Operations) Period of Restoration from incident until able to resume operations Business Income Net Income plus continuing normal operating expenses including payroll

7 Income Coverage Description of Business Income on Dec Business Income Including Rental Value Business Income Other than Rental Value Rental Value

8 Let s Take a Break!

9 Income Coverage Insuring Agreement Five Coverage Triggers Suspension of operations During period of restoration Caused by direct physical loss to property On the described premises or within 100 feet Covered Cause of Loss

10 Income Coverage Covered Causes of Loss Standard ISO Basic Broad Special Earthquake

11 Income Coverage Exclusions Power Failure outside the building Finished Stock Antennas Suspension or Cancellation of Leases and Delays Extra Expense beyond the Period of Restoration Other Consequential Loss

12 Income Coverage Additional Coverages Covered Within Limit Extra Expense Civil Authority Alterations and New Buildings Extended Business Income

13 Income Coverage Coverage Extensions Newly Acquired Locations

14 Let s Take a Break!

15 Limits of Insurance Maximum pay out for any one loss Coverage Extensions ARE additional limits Additional Coverages do not increase limits

16 Limitation Electronic Media and Records Additional Condition Coinsurance Payroll Limitations Power Heat and Refrigeration Deduction Danger Guesstimate

17 Optional Coverages Agreed Value Maximum Period of Indemnity Monthly Limit of Indemnity

18 Agreed Value Suspends Coinsurance Must Request at Renewal Cannot use with Business Income from Dependent Properties Broad Form

19 Maximum Period of Indemnity No Coinsurance Pays Actual Loss Sustained including Extended Business Income during the first 120 days after the beginning of period of restoration Cannot Blanket

20 Monthly Limit of Indemnity No Coinsurance Maximum loss payment in any 30 day period is The Limit of Insurance multiplied by Fraction specified on Declaration Page 1/3, ¼, 1/6 (NOTE FRACTION DOES NOT REPRESENT A NUMBER OF MONTHS)

21 Example Limit of Business Income - $100,000 written on ¼ limitation Provides $25,000. each 30 days llst 30 days claim $30,000 pays $25,000 2 nd 30 days claim $10,000 pays $10,000 3 rd 30 days claim $40,000 pays $25,000 4 th 30 days claim $25,000 pays $25,000 5 th 30 days claim $20,000 pays $15,000

22 EXTENDED PERIOD OF INDEMNITY Lengthens Extended Business Income up to 30 days Remember more coverage time required Higher Limits

23 Extra Expense Definition

24 Goal To maintain partial operational continuity following a loss

25 Who Needs Extra Expense?

26 Examples of Extra Temporary Help Advertising Quick Ship on Equipment Temporary Location Any expense to expedite getting business up and running

27 Common Limits 40/80/ /100/100 35/70/100

28 Examples 40/80/100 (percentages) 40% 0 to 30 days 80% 31 days to 60 days 100% 61 days plus Starts at period of restoration

29 Thanks for attending today s session.