The argument that the hotels would have profited from the hurricane if they hadn’t been impacted is totally self-serving and illogical. If the hurricane didn’t happen, there would have been no increased demand. The hotels want the courts to put a bubble over their buildings — let everyone else be destroyed then come stay at our place so we can gouge you. How ridiculous.
I agree with you. But note how you phrased your point. You said “If the hurricane didn’t happen…” When you phrase it like that you are absolutely correct and in my view that;s how the policy was intended to be interpreted. The issue, which the author of the article didn’t report, is what is meant by the phrase “had no loss occurred.”
The typical business interruption poilicy states under how to calculate a loss:
Experience of the business — In determining the amount of the Time Element loss as insured against by this policy, due consideration shall be given to experience of the business before the loss and probable experience thereafter had no loss occurred.
The last four wrods are key. What is the “loss”? Is the loss the hurricane as you phrased it, or is the loss the insured’s loss of business. If you say the “loss” is the hurricane, then had no loss occurred means had no hurricane ocurred. But if loss means the insured’s individual loss of business, then you have to look at it as if the insured were in the bubble.
That is the issue…how to interpret the phrase “had no loss occurred”, and most courts have said that the “loss” is the hurricane. Other courts (and there have been more than one despite what Mr. Harckham said) have said the loss is what the individual business suffered.
Well stated. Boils down (like it always does) to interpretation of language. A lawyer’s most important class in school is not about case law or precedent or procedure. It’s English composition.
Actually it’s creative interpretation. Most big legal cases have been the result of one or more creative attornies finding what they think is a salable or winning argument that identifies, or figuratively creates coverage out of an “exclusion” or other policy terms and conditions etc. that insurance company attornies
who drafted the policy language either did not intend, or did not unambiguously remove.
For ISO and insurance company attornies, it’s a defensive game, while Marketing divisions attempt to remain competitive by including profitable coverages they feel are in demand, and for the
plaintiff’s attornies, it’s mining for diamonds often at the expense of the mine owners.
I think it’s ridiculous to suggest or expect that an insured who is put out of business by a covered loss that is beyond their control should have no simple formula to apply that would allow them to calculate the amount of coverage they paid for. Granted the case at hand must have involved ISO forms, I wonder what percentage of commercial policies in force are now written on
company specific forms that may resolve or cloud the issue further?
My view of “the loss” is what the insured suffers, as opposed to the “cause of loss or insured perils” that generated or contributed to the actual loss.
It seems simple enough to amend a form to say we will pay based on
the insured’s income experience as demonstrated by their records
for the year preceding the loss, but we will not pay any amount above that including the expectation that income would have increased due to the catastrophy had the insured’s business been
able to continue functioning as normal.
I think we’d all benefit by saying what we mean, meaning what we say, dealing fairly, and refusing to allow a sharp minded attorney
to increase our bottom line at the expense of our policyholder.
A professional industry should base it’s reputation on the results
it produces (what it delivers), which it’s greatful policyholders will freely testify to, and never attempt to weasel out of a legitimate obligation just because it can find a legal means to do so, or worse, because it can afford to our muscle the defendant with years of legal battles.
This article suggests that what too many of us agents/brokers may think is cut and dry, is anything but that. In some cases it may be a matter of competition where the policyholder buys and inferior
coverage form (perhaps not knowing it depending on the level of sophistication of the buyer) to save premium, while in other cases it may be standard commonly used forms that give no one any indication of what potential problems they may face when they attempt to collect. That’s not good for anyone but the attornies!
Is it any wonder that BI/EE claims are almost always a nightmare for the poor unsuspecting buyer of BI/EE insurance? Agents typically don’t understand what they are selling, underwriters generally don’t understand the coverage and claims examiners are in pretty much the same boat. Business Income is an E&O waiting to happen basically due to the complexity of the coverage unless a “no coinsurance’ form is selected, in which case the insured will likely be underinsured. Why in anyone’s name does this coverag have to be so complex and thus misunderstood – coinsurance, 14 pages of worksheet, agreed value,doesn’t include ordianance or law, just how long will the period of restoration be – and so on and so forth. It’s worse than doing one’s own taxes. Why on earth isn’t a limit selected with a conventional (no hour deductibles)deductible that responds with no coinsurance???
And if the BOP is considered to be the answer consider the typical 12 month limitationw when you consider that permits often take more than 12 months to be approved. Business Income is without doubt the most important and necessary coverage that any insured buys an it is time for it to be simplified to all – insured, agent and claim’s adjuster. Mike
Well said!
Money is the blood of a business. If a large multi store operation suffers a total loss on one store and it has three other stores within a couple of miles; the other stores may see an increase in business, but how do we calculate how much is lost to other local competitors? If it takes a year or so to begin reconstruction, why shouldn’t we be able to offer the insured as long a coverage period as may be practical – 2-3 years? We don’t want any E&O claims.
These are the same business owners who cry fowl over too much legislation, too much government and way out of control personal injury litigation……
Here they are, in all their greed, pushing for higher insurance response through litigation and threats of legislative response in their favor so they can pay minimal premium and then rape insurers for massive financial benefit.
Like all, I agree this coverage is designed to only make you whole which is to cover what you lost, not a best guess on what your losses would have been in a fantasy world where your business wasn’t destroyed. This kind of story just makes me sick for the state of our country as a whole.
Down with big government, reform Tort litigation, bring back personal responsibility!!!! Ummmm. I mean, unless all those things will benefit me financially then lets keep the gravy train rolling.
A person’s strongest opinions tend to reflect their perspective. How often are we in the enviable position of actually having all of the facts, and actually understanding all of the nuances of opposing party’s reasonable arguments?
Violent metaphores are disrespectful (sure you didn’t mean to be)
in that they cheapen the impact of the violent acts for the sake of
clarifying a dramatic point. We don’t need to raise our emotional
level of upset here, we need to raise our intelectual level of
challenge so we can all do a better job.
Most our us in the business would agree that bringing back personal responsibility would be a BIG plus, however, that’s not
the trend. In the mean time, I expect that any insurance company
should be large enough to afford competent legal counsel, and wise
enough to deploy it’s use beneficially rather than destructively.
We should all ask why every insurer is not dramatically increasing
their budget for anti fraud investigators since we hear that some
30% or more of every insurance premium dollar paid is driven by
fraudulent claim expenses?
Having been involved in a few large loss disputes over BI cases, the coverage should be understood as an invitation to litigate and then negotiate. It is not a tort reform issue. Measuring business income in post Sept 2008 economy is not an easy task, and it is especially complicated in light of the policy language I have reviewed.
Just a thought, there may be an alternative which both satisfied the insured’s who desire a reasonable replacement of customary net income and underwriters desire for an accurately measured loss exposure and commensurate premium… An agreed value based upon historic, seasonally adjusted calculations in a Per-Diem form paid monthly immediate after the loss is deemed insured for up to 24 months or upon restoration with 90 days extension period thereafter. Just a thought for hotels, stores and professional service providers…
Just as moral behaviors and values change over time, so do expectations of what is right and fair. We like to think of these things as static, it’s right or it’s wrong, but life teaches that many situations are much less clear cut than that. With the exception of catastrophic perils that the vast majority of reasonable actuaries agree can not be profitably rated in a competitive open market environment, I’d like to see all insurers
strive to offer policyholders a range of choices including the possibility of full recovery. If the rates are adequate, and reinsurance is available, then the size of the loss should not matter to the insurer. What should matter is that the insurer has just become a working partner with their policyholder, and as such the insurer will exit the claim experience with either the unshakable loyalty and gratitude of it’s policyholder, or something
less. What’s your goal? Mine is to earn their continued business
and earn back those loss dollars in future premiums and referrals!
The argument that the hotels would have profited from the hurricane if they hadn’t been impacted is totally self-serving and illogical. If the hurricane didn’t happen, there would have been no increased demand. The hotels want the courts to put a bubble over their buildings — let everyone else be destroyed then come stay at our place so we can gouge you. How ridiculous.
I agree with you. But note how you phrased your point. You said “If the hurricane didn’t happen…” When you phrase it like that you are absolutely correct and in my view that;s how the policy was intended to be interpreted. The issue, which the author of the article didn’t report, is what is meant by the phrase “had no loss occurred.”
The typical business interruption poilicy states under how to calculate a loss:
Experience of the business — In determining the amount of the Time Element loss as insured against by this policy, due consideration shall be given to experience of the business before the loss and probable experience thereafter had no loss occurred.
The last four wrods are key. What is the “loss”? Is the loss the hurricane as you phrased it, or is the loss the insured’s loss of business. If you say the “loss” is the hurricane, then had no loss occurred means had no hurricane ocurred. But if loss means the insured’s individual loss of business, then you have to look at it as if the insured were in the bubble.
That is the issue…how to interpret the phrase “had no loss occurred”, and most courts have said that the “loss” is the hurricane. Other courts (and there have been more than one despite what Mr. Harckham said) have said the loss is what the individual business suffered.
Well stated. Boils down (like it always does) to interpretation of language. A lawyer’s most important class in school is not about case law or precedent or procedure. It’s English composition.
Actually it’s creative interpretation. Most big legal cases have been the result of one or more creative attornies finding what they think is a salable or winning argument that identifies, or figuratively creates coverage out of an “exclusion” or other policy terms and conditions etc. that insurance company attornies
who drafted the policy language either did not intend, or did not unambiguously remove.
For ISO and insurance company attornies, it’s a defensive game, while Marketing divisions attempt to remain competitive by including profitable coverages they feel are in demand, and for the
plaintiff’s attornies, it’s mining for diamonds often at the expense of the mine owners.
I think it’s ridiculous to suggest or expect that an insured who is put out of business by a covered loss that is beyond their control should have no simple formula to apply that would allow them to calculate the amount of coverage they paid for. Granted the case at hand must have involved ISO forms, I wonder what percentage of commercial policies in force are now written on
company specific forms that may resolve or cloud the issue further?
My view of “the loss” is what the insured suffers, as opposed to the “cause of loss or insured perils” that generated or contributed to the actual loss.
It seems simple enough to amend a form to say we will pay based on
the insured’s income experience as demonstrated by their records
for the year preceding the loss, but we will not pay any amount above that including the expectation that income would have increased due to the catastrophy had the insured’s business been
able to continue functioning as normal.
I think we’d all benefit by saying what we mean, meaning what we say, dealing fairly, and refusing to allow a sharp minded attorney
to increase our bottom line at the expense of our policyholder.
A professional industry should base it’s reputation on the results
it produces (what it delivers), which it’s greatful policyholders will freely testify to, and never attempt to weasel out of a legitimate obligation just because it can find a legal means to do so, or worse, because it can afford to our muscle the defendant with years of legal battles.
Insurance companies are only responsible to put the insured back to pre loss conditions and not for changes in business conditions.
I think that is an accurate statement some the time. But is BI coverage a snap shot?
This article suggests that what too many of us agents/brokers may think is cut and dry, is anything but that. In some cases it may be a matter of competition where the policyholder buys and inferior
coverage form (perhaps not knowing it depending on the level of sophistication of the buyer) to save premium, while in other cases it may be standard commonly used forms that give no one any indication of what potential problems they may face when they attempt to collect. That’s not good for anyone but the attornies!
Is it any wonder that BI/EE claims are almost always a nightmare for the poor unsuspecting buyer of BI/EE insurance? Agents typically don’t understand what they are selling, underwriters generally don’t understand the coverage and claims examiners are in pretty much the same boat. Business Income is an E&O waiting to happen basically due to the complexity of the coverage unless a “no coinsurance’ form is selected, in which case the insured will likely be underinsured. Why in anyone’s name does this coverag have to be so complex and thus misunderstood – coinsurance, 14 pages of worksheet, agreed value,doesn’t include ordianance or law, just how long will the period of restoration be – and so on and so forth. It’s worse than doing one’s own taxes. Why on earth isn’t a limit selected with a conventional (no hour deductibles)deductible that responds with no coinsurance???
And if the BOP is considered to be the answer consider the typical 12 month limitationw when you consider that permits often take more than 12 months to be approved. Business Income is without doubt the most important and necessary coverage that any insured buys an it is time for it to be simplified to all – insured, agent and claim’s adjuster. Mike
Well said!
Money is the blood of a business. If a large multi store operation suffers a total loss on one store and it has three other stores within a couple of miles; the other stores may see an increase in business, but how do we calculate how much is lost to other local competitors? If it takes a year or so to begin reconstruction, why shouldn’t we be able to offer the insured as long a coverage period as may be practical – 2-3 years? We don’t want any E&O claims.
These are the same business owners who cry fowl over too much legislation, too much government and way out of control personal injury litigation……
Here they are, in all their greed, pushing for higher insurance response through litigation and threats of legislative response in their favor so they can pay minimal premium and then rape insurers for massive financial benefit.
Like all, I agree this coverage is designed to only make you whole which is to cover what you lost, not a best guess on what your losses would have been in a fantasy world where your business wasn’t destroyed. This kind of story just makes me sick for the state of our country as a whole.
Down with big government, reform Tort litigation, bring back personal responsibility!!!! Ummmm. I mean, unless all those things will benefit me financially then lets keep the gravy train rolling.
A person’s strongest opinions tend to reflect their perspective. How often are we in the enviable position of actually having all of the facts, and actually understanding all of the nuances of opposing party’s reasonable arguments?
Violent metaphores are disrespectful (sure you didn’t mean to be)
in that they cheapen the impact of the violent acts for the sake of
clarifying a dramatic point. We don’t need to raise our emotional
level of upset here, we need to raise our intelectual level of
challenge so we can all do a better job.
Most our us in the business would agree that bringing back personal responsibility would be a BIG plus, however, that’s not
the trend. In the mean time, I expect that any insurance company
should be large enough to afford competent legal counsel, and wise
enough to deploy it’s use beneficially rather than destructively.
We should all ask why every insurer is not dramatically increasing
their budget for anti fraud investigators since we hear that some
30% or more of every insurance premium dollar paid is driven by
fraudulent claim expenses?
Having been involved in a few large loss disputes over BI cases, the coverage should be understood as an invitation to litigate and then negotiate. It is not a tort reform issue. Measuring business income in post Sept 2008 economy is not an easy task, and it is especially complicated in light of the policy language I have reviewed.
Just a thought, there may be an alternative which both satisfied the insured’s who desire a reasonable replacement of customary net income and underwriters desire for an accurately measured loss exposure and commensurate premium… An agreed value based upon historic, seasonally adjusted calculations in a Per-Diem form paid monthly immediate after the loss is deemed insured for up to 24 months or upon restoration with 90 days extension period thereafter. Just a thought for hotels, stores and professional service providers…
Just as moral behaviors and values change over time, so do expectations of what is right and fair. We like to think of these things as static, it’s right or it’s wrong, but life teaches that many situations are much less clear cut than that. With the exception of catastrophic perils that the vast majority of reasonable actuaries agree can not be profitably rated in a competitive open market environment, I’d like to see all insurers
strive to offer policyholders a range of choices including the possibility of full recovery. If the rates are adequate, and reinsurance is available, then the size of the loss should not matter to the insurer. What should matter is that the insurer has just become a working partner with their policyholder, and as such the insurer will exit the claim experience with either the unshakable loyalty and gratitude of it’s policyholder, or something
less. What’s your goal? Mine is to earn their continued business
and earn back those loss dollars in future premiums and referrals!