Business Interruption? Most Small Firms Clueless

By Mark E. Ruquet

NU Online News Service, Oct. 21, 11:39 a.m.EDT?Safeco said a survey of small business owners foundthat more than half of them have no business interruption insuranceand know little about it.

The Seattle-based insurer said it has formulated an extremelysimple online calculator for businesses and agents to calculatecoverage needs after its research showed many small concerns do notunderstand the benefits of business interruption insurance andunderestimate how much it will take for them to get their businessup and running again after a major catastrophic loss.

Safeco said its national survey of 500 small business owners(defined as those with less than 100 employees) revealed many donot understand what business interruption insurance can do forthem.

The poll, conducted by International Communications Researchbased in Media, Pa., found that 55 percent of the respondents saidthey do not have business interruption insurance and 65 percentsaid they are unfamiliar with it.

Safeco said that a business that meets a catastrophic losstypically takes four-to-six months to rebuild and another sixmonths to a year to get back to the income level they enjoyed priorto the catastrophe.

However, 45 percent of those surveyed believed it would takeless than three months to recover.

Six out of ten of the respondents said they did not have theinformation they needed to determine how much business interruptioninsurance they needed.

David Strudthoff, director of premium audit services for Safeco,said that the survey came about because the carrier saw smallerbusinesses buying less business interruption insurance, and wantedto learn why.

"We got some interesting results," he said.

While he admitted that the coverage is difficult and complicatedto write because it covers "intangibles," it is an area ofopportunity for agents when they get their clients to understandwhat it covers. He said the added costs stemming from a catastrophein loss markets and future income can equal the cost of rebuildingthe business from scratch.

Safeco, Mr. Strudthoff said, has created an online calculatorthat helps clients make their purchasing decision by forming abasis from which to start. He said it is not the first suchcalculator, but it is the simplest, requiring the answering of fourquestions.

The calculator, Safeco said, is available at its Web site,www.safeco.com/businessincome,or can be incorporated into an agent's Web page.

And for the independent agent, Mr. Strudthoff added, it is notonly a business opportunity; it is an extra step that "helps theclient to take that extra step to survive a shut down."