Businesses, Interrupted

All around the Gulf Coast, fishermen, motel owners, restaurateurs and other small businesses justifiably are concerned about what the future may hold as a result of the Deepwater Horizon oil spill off the coast of Louisiana. Lawsuits are beginning to pile up. Meanwhile, thousands of business owners and employees whose livelihoods depend on the resources that stem from the Gulf of Mexico are left in limbo.

Larger businesses affected by the spill may have emergency plans and insurance in place to cover losses resulting from this man-made disaster. But what about the small businesses along the Gulf Coast and all the businesses they supply?

While businesses away from the coast might not suffer property damage, business income losses are sure to add up as the migration of the oil impacts ports and shipping lanes, including those along the Mississippi River. Indeed, while a manufacturer in St. Louis may be far removed from the events unfolding in the Gulf, the trouble hits close enough to home when shipping is interrupted to the point where his products can’t get out and his suppliers can’t get their wares to him.

Insurance won’t always have the answer – there are conditions, exclusions and waiting periods. But ignoring the risk is also not an answer.

Buying insurance one thinks one will never need is difficult at any time, but in the current economy the sting hurts worse than ever. And yet, as Insurance Journal’s resident insurance expert, author and educator Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, puts it, no business can survive very long without business income coverage. And one of the things that bothers Boggs the most is that so few business owners buy it.

Boggs, director of the Insurance Journal Academy of Insurance, in his timely new book, “Business Income Insurance Demystified,” notes that almost one-third of businesses that are shuttered by a property disaster such as a serious fire never reopen, or close soon after the event due to monetary strain.

Business interruption insurance covers profits that are lost and continuing expenses such as salaries, rent and utilities when a company is forced to shut down by a disaster, or even by an event such as an extended power outage. But Boggs believes that insurance agents and brokers too often either fail to sell or they improperly structure business income coverage, setting up their clients for business failure following a major loss.

In effect, while not buying business interruption insurance is one of the biggest mistakes small businesses make, not correctly selling business income protection is probably one of the biggest mistakes agents can make. Employers rarely think about their business not being able to open; they need agents to remind them.

Boggs’ book is available in the bookstore on www.insurancejournal.com. It might make sense to grab a copy and brush up on business income insurance. Then ask your business clients if they’ve seen the news lately.