In an environment as competitive as insurance, it's hard to believe a certain major coverage is routinely overlooked, especially when it addresses a critical need of nearly every commercial client. Strange, but true. Consider the following scenario.

You visit friends in another town. They offer to take you to their favorite place for "killer" chicken wings. In the great tradition of all legendary eating establishments serving up wings, barbeque, fried catfish and such, the joint is likely to be located either in a shack out in the sticks or tucked into an empty bay in a semi-vacant warehouse-someplace that obviously does not appear on the health department inspector's maps. Invariably, the d?cor is mid-Depression era. Janitorial services, if any, are minimal, as the owner evidently assumes dirt and grime will simply waft out the door on the generous mists of cooking grease that envelop all surfaces. Flames will shoot from the broiler, smoke will billow from the fryers, and you'll need no menu since every available food item will be represented by a stain clearly visible on the cook's once-white uniform shirt and apron. The atmosphere will be raucous, the help efficient, the food divine, and the line of customers long.

So, in the instant you first attack your order of nuclear wings, the thought foremost on your mind, of course, will be, "Which insurance coverage does the owner need most?"

There is only one correct answer.

Oh, sure, arguments can be made for other possibilities. For example, some may suggest workers compensation, but only those so unfamiliar with such businesses as to actually assume there are employees. In reality, the staff usually consists of the owner's family members, independent contractors whose entire careers with a particular eatery may consist of the night you are there, and various friends of the family's teenagers (uncompensated except for all the food and drink they can skim).

If you're thinking about property coverage, it must have been awhile since you spoke with your underwriters. Let's think this through for a moment. A dining establishment is located in the middle of nowhere or in a questionable part of town. Construction quality is minimal. Maintenance and housekeeping are borderline to nonexistent. Eating utensils and serving dishes are plastic. Wood tables. Paper napkins. Deep-fat fryers. Open-flame cooking. A patina of grease covers everything. Can you imagine any property underwriter hesitating to leap on this type of risk? If not, quit reading now. Either you've picked up this magazine in error at the library, or you are a banker still researching ways to tap into the property-casualty insurance motherlode. (Hint to banker: Give it up. Somebody lied.) Adjusting any property claims for such a business is quite challenging, since damage from a fire or catastrophic event will be considered an upgrade to the premises rather than a loss.

Liability coverage may be closer to the target, although if ever there were a strong defensive argument based on assumed risk, it would be the wing/ barbeque/catfish place. Patrons testifying in court can hardly deny they were aware of the risks presented by wide variances in food preparation techniques or the presence of various signs of insect life. And any establishment that uses enough poison to kill off all the inherent insects can't convince me that none of those chemicals made its way into my food! I freaked out a friend some years ago when I found a large roach in my iced tea (at an "upscale" eating establishment) and told him there was no need to worry since the bug was still alive. If that big fella had been dead, I'd have left in a heartbeat. Also, true believers know a floor coated with cooking grease presents not a slip-and-fall hazard, but rather a chance to finally realize the dream of recreating James Brown's greatest dance moves.

Enough hints. Do you see the "key coverage" answer yet?

Business income. Or as grizzled veterans originally learned the nomenclature, "time element" or "business interruption." Yet, according to industry statistics and a recent IRMI Insight (a free e-mail newsletter from the Insurance Risk Management Institute, www.irmi.com), one could say (apologies to Shakespeare), "This coverage by any other name still would not be written." Agents' amazing lack of awareness of business income coverage is so universal that one shudders to think how bleak the scenario would be if the popular BOP policy didn't include it as part of the package.

Even more astonishing is the way ignorance of the coverage has persisted in recent years, even as courses on risk management and consultative selling have gained in popularity. Theoretically, thousands of producers now believe the key to making proper coverage recommendations is to see problems from an insured's vantage point. All the courses assert that to simply sell a prospect what we wish to offer, instead of first discovering his or her true needs, borders on malpractice. So all over America newly enlightened agents are getting in touch with their inner consultants and building holistic coverage programs based on the priorities of their clients. But, at least in terms of business income sales, a lot of agents' inner consultants are holistically out to lunch.

That wing guy hopes to get rich, or at least to earn enough money to avoid having to go back to a real job. And when you look at his investment in location (minimal), equipment (ditto) and staff training (zilch), then see the long lines of salivating patrons, do you doubt he is realizing his dream? A similar dream drives millions of otherwise sane people to daily rise and plunge once again into the world of alternating boredom and chaos we call business ownership. Given this, it seems reasonable to assume the No. 1 coverage written for businesses should be the one created specifically to respond to loss of the thing business owners treasure most. And if that thing is income, then what coverage might that be? To paraphrase the Church Lady from "Saturday Night Live": "Hmmm...could it be business income coverage?" There is no doubt business owners need coverage for the loss they can least afford to bear. New locations can be found, but for many types of businesses, once income is lost, it's gone forever. So what could possibly be the reason few, if any, agents sell the coverage? Could it be...Satan?!?

Although some evidence strongly suggests demonic possession in certain carrier decisions and forms language, in the case of business income coverage, it may be plain old ignorance and oversight.
Regardless of the reasons, it is time to redress this grievous oversight, minimize the potential E&O exposure, maximize your production and rectify this wrong! And in honor of this month of Valentines, I leave you with a greeting card message that business owners may wish to send their agents:

Roses are red;
Bees make honey.
If you had a clue,
You'd cover my money.

Special Reports /

Policy Issues: To find the missing coverage, just follow the money

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