Blog Question: Additional Increased Cost of Working only for a Real Estate Practice
Long time listener first time caller…ha
I am reviewing an buspack for a real-estate office and was concerned when I noticed that there is on Additional Increase in Cost of Working (“AICOW”) cover for $100,000 no cover for business interruption losses other than the above – and is for a 12 months indemnity not sure of why the approach like this?
Could you shed any light to my small brain on why a broker would recommend this at all,
In addition it appears to be an off the shelf approach – with a substantial theft cover, however no thought to EEI and Data Loss
What are your thoughts considering that this office has a substantial rent roll (awaiting figures on this)
Thanks for your thoughts and any insight
Regards Aaron (surname and email provided)
I replied as follows.
Hi Aaron, A lot of client’s with office risks think that just having additional increase cost of working is all they need as they will be able to quickly relocate, perhaps work from home and not suffer any significant loss of turnover.
With real estate agents I have seen cases in my career where the area has suffered quite wide ranging damage and, as a result, the suburb or town losses favour with the buyers for a period.
At the same time their stock of rental homes or business premises could be damaged, which means that tenants stop paying rent and management income falls, as well as the commission sales revenue.
There is a great check list of whether a business needs business interruption insurance in the free eBook Mannings Guide to Interruption Insurance. The book and check list are designed to be a sales tool and at the same time protector of the broker’s PI program
During this period, the estate agents are working harder than ever arranging insurance assessors, obtaining quotes for repairs etc. With cyber risk, this is a real risk as is loss of utilities.
With cyber risk there are a number of products now on the market and the better ones have a business interruption component. I would start by looking at, depending on the size of your (potential) client’s business; AIG, Chubb, Dual or Zurich. There are other good products on the market but these are the ones that immediately come to mind.
If you are not a broker then please speak to your insurance broker and ask them for a print out from PolicyComparison.com on the cyber policies available.
Of course with so many businesses dependant on the internet, loss of power and or the data connection can cause disruption.
Normally, however the sales are not lost, which is the starting point for a business interruption loss but delayed. Some weekly benefits covers may provide cover depending on the wording.
In summary, full business interruption cover certainly provides the broadest and best coverage overall but of course it is more expensive.
Additional Increase in Cost of Working will provide some protection and may well be all that is needed sometimes, but as I explained with larger losses or even, prevention of access, public utilities outages it may not be enough.
Hope this explains both sides.