An underwriter from Travelers provides you with some though-provoking information. A manufacturing client had the opportunity to meet with an underwriter, Julie Pichler, from Travelers, who has been underwriting for over 20 years. Beyond just an introduction, the purpose of the meeting was to discuss Business Income and Extra Expense coverage.
Don't delete yet, channel your inner Brandon Jennings, Tom Brady, Vernon Davis, Ryan Howard, Michael Phelps and say to yourself, "You Must Protect this House," just as they are paid to do.
Here are some key items that were discussed during the meeting:
- Did you know when you Google "Business Income Worksheet," it is the Traveler's BI worksheet that is number one. Did you know that it is one of the most challenging worksheets to complete? It is very detailed. But if you think about it, SHOULDN'T IT BE? This coverage protects your company profits, the payroll for all of your workers, and the extra expense to get back up and running so you don't lose customers.. It's incredibly important.
- How long will it take them to get back up and running? You WANT to say six months, but you shouldn't. Typically, the amount of months selected for this answer is too few. After a total or partial loss, you're not exactly working on flat ground when it comes to reconstruction. Debris removal time will need to be considered. Another thing to consider is how many facilities you have where you can transfer work during the period of reconstruction? Do you have a formal plan in place? Most of my clients have a plan when it comes for IT, but not necessarily for the entire operation.
- Most policies offer a 24-hour waiting period (a time deductible) before coverage is activated. If you have a high risk tolerance, carry large property deductibles, or prefer to self-insure, you can change that time deductible to 48 or 72 hours and save a little money.
- Let's say Harley, or Oshkosh Trucks, or Generac, or Manitowoc Cranes translates to 50% of your revenues? If you do all the machining or fabrication for them, and you no longer exist because the machines you need are coming from Europe in 3 months or your lead times go from 2 weeks to 6 weeks, guess what, you're major client is going elsewhere. Most policies offer 180 days after you are 100% operational to get your income/clients back up to where they were post-accident. Is that enough time, maybe not? You can get other options - perhaps you need a year or more?
- Let's say you depend on one key supplier. What if their operations are suspended for 12 months due to a fire or windstorm? Did you know you could buy business income insurance on them? Do you think your banker would be interested in knowing you are prepared for all of these scenarios?
- Did you know there are Benchmarks by industry (percentages) that you multiply against your sales that will give you a ballpark amount that you should be carrying for Business Income insurance? IT SHOULD NOT TAKE THE PLACE OF AN ACTUAL BUSINESS INCOME WORKSHEET. You can download these benchmarks here.
- Have you ever seen a Sample, Editable, Business Continuity Plan?
- Here are some other documents available that supplement the items above that are definitely worth reading.