Every day, we help clients navigate the insurance claims process for their various property losses, and we know the ins and outs of insurance policies. We’ve seen a lot over the years, and one thing we know for sure is that insurance companies constantly change the language in the insurance policies they sell. This happens for reasons both good and bad; sometimes they change language on purpose, other times they do it without realizing the unintended consequences. Regardless of the reason, when insurance policies change, we often see problems – which fall on the shoulders of policyholders.
When we see these problems, we bring it to the attention of the insurance agents in our network who we work with. When we see these reductions in coverage, we recognize that they are likely unintentional, and when we flag this issue for attention, insurance companies overwhelmingly recognize the unintended consequences of the change – and they move quickly to make it right. After all, these unintended effects could pose problems for the insurance company, as well.
In our recent series of posts explaining what “Business Interruption” (BI) coverage is and how it works, we emphasized the importance of Business Interruption. This coverage is critical if you suffer a catastrophic property loss and must shut down your business for a period of time. Business Interruption coverage makes you whole, and puts you back in the same financial position you would have been in had there been no loss at all.
In preparing our BI series, the SMW team took a trip down memory lane, and one case study from a few years back really stands out.
A machine shop in Newburyport, MA suffered a fire that caused serious damage to the shop. The business owners had to temporarily relocate operations to continue servicing its customers, but – upon reviewing its insurance policy – realized that it had a 90-day limitation on the payroll for the entire company, including the owners.
This posed a huge challenge for the company, which felt continuing payroll was necessary to retain experienced personnel and avoid unemployment rates, among other concerns.
SMW stepped in and helped this small business continue operations by taking advantage of its BI coverage and helping it relocate to a temporary location.