The BOP is NOT always Actual Loss Sustained For Business Income
Whenever I ask the question, how does the Business Income on the BOP differ from other forms the answer always is that it is Actual Loss Sustained (ALS). Well, the truth is that ALL Business Income forms are Actual Loss Sustained, unless they are per diem, which simply means the business income claim will be paid based on the economic loss the client actually sustains. What has been true about a BOP is that it has historically been “unlimited” in the dollar amount it would pay subject to a maximum time frame such as 12 months. Well—NOT any more—buyer beware.
Did You Know: That some BOP companies are adding endorsements that state they will pay the greater of a time frame (12-15 months) or the limit of insurance for Business Income that appears on the Declarations page which has a coinsurance requirement? That is far from what we have been telling our clients when we use the words Actual Loss Sustained. Also, it is anyone’s guess how the form would respond to a partial Business Income loss.
Did You Know: That some BOP carriers are writing on an ALS basis but for certain types of insureds they are putting a maximum amount recoverable. An example one carrier indicated that for manufacturers that were eligible for their BOP program would be subject to 65% of the total sales of the company
Did you Know: That some BOP carriers are limiting the amount of Business Income coverage based on types of equipment. An example provided was a doctor’s office that had an expensive diagnostic machine. There was an internal limit on the BOP Business Income specific to any loss to that piece of equipment.
Laurie Infantino, AFIS, CISC, CIC, CRIS, ACSR, CISR
Insurance Skills Center
www.InsuranceSkillsCenter.com