Why Now Is the Best Time to Sell Business Interruption Insurance
Tuesday, June 30, 2015/Insureon Solutions, Products, Marketing
For most people, summer is the season to get outdoors and have some fun. They pack their weekends with backyard barbeques and picnics in the park, trying to get as much of the sun as they can. No doubt, you’re getting outside, too.
With all the summer distractions, the thought of selling Business Interruption Insurance products might be miles away. But it turns out summer might be a smart time to sell this policy.
IA Magazine cites Agility Recovery, a provider of disaster recovery solutions that claims July is the month with the most disasters.
That raises a more important question: what constitutes a disaster? According to Agility Recovery, the most common causes of business interruptions are singular events, such as a…
- Fire in an office.
- Burst water pipe.
- Smashed transformer.
- Fallen communications tower.
For a small business that’s operating on a shoestring budget, a poorly timed disruption could cause as much havoc as Superstorm Sandy. Without Business Interruption coverage, one unlucky break could mean the end of their business.
A Business Interruption Insurance Refresher
Commercial Property Insurance covers the physical loss from, say, a fire or a windstorm, but that’s only a portion of the damages a business can suffer after a catastrophe. In response to those additional losses, insurance providers developed Business Interruption Insurance. Sometimes referred to as Business Income Insurance, this policy typically covers…
- Lost revenue.
- Fixed expenses.
- Temporary business relocation costs.
- Other reasonable expenses.
Business Interruption coverage has some limits that are important to understand before you start selling. First, it is usually an endorsement to a Commercial Property policy, so the events that trigger one also trigger the other. If Commercial Property doesn't cover wind damage, then a client who needs temporary shelter after a tornado won’t receive a Business Interruption payout either.
Additionally, Business Interruption has a waiting period and a “period of restoration.” The coverage kicks in after the waiting period and only extends until operations are running again. Some policies limit the restoration period to a year or less.
How to Sell Business Interruption Insurance
If your small-business client is struggling to get by, they may see Business Interruption Insurance as a luxury. In their minds, the disastrous events that bring operations to a halt are so rare that going without coverage seems like a pretty safe bet.
Convincing them of the coverage’s value means convincing them they have an exposure that could do serious harm to their assets. Here are some ways you might be able to do just that:
- Target particular clients. Review your book for commercial clients who lack Business Interruption coverage so you can design a pitch specifically for them. Be sure to select a delivery method (e.g., email, phone call, or mail) that is most likely going to get their attention.
- Perform a risk assessment. Is your client’s office adjacent to a restaurant? Near a busy thoroughfare? Dependent on the Internet? Clients need to know these innocuous realities can turn into dangerous hazards.
- Get them thinking. Your client may not have considered how they might pay rent without revenue coming in. Working through a few budget items may help them see how much downtime they can (and can't) afford.
- Tell a story. Numbers are effective, but so are real-life stories. If you don’t have any of your own, Agility Recovery’s Resources page has plenty of case studies that demonstrate just how destructive even a small interruption can be.
- Assist their efforts. While your client’s insurance coverage is your greatest concern, you could develop a marketing strategy that educates clients about Business Interruption Insurance and disaster preparedness. For example, you could create a checklist your client can use during a disaster that includes the bullet point "review insurance coverage."
For more insurance agency marketing tips, read “3 Ways Insurance Agencies Can Grow with Social Media.”