Issue
During a coverage analysis exercise, we pointed out how a policy included a 24-hour waiting period
before the business interruption coverage began. We asked the prospect, "What does 24 hours
mean to you?" He said, "If my business goes down on Monday, my business interruption
coverage will begin paying me on Tuesday."
His understanding was wrong. This particular policy defined the word "hour" as a "normal
business hour." In fact, his deductible was three days. This prospect was an Internet-based
company that generates revenue seven days a week. A three-day glitch could blow an entire quarter's
results. At the end of the day, we could not negotiate a better deductible.
Result
Our discussion did result in the CFO consulting with his IT department to look closer at their
disaster recovery plan. Later, they made changes to their systems to protect themselves from this
exposure.
Value
Improved disaster recovery plan and a CFO that can sleep at night.
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