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On this episode of Drilling It Down, Liam and Wes tackle the crucial topic of business owner policies in light of recent hurricanes, emphasizing preparedness for natural disasters. Wes shares personal experiences to highlight the disruption hurricanes can cause to everyday business operations. The hosts delve into aspects of insurance coverage, stressing the importance of comprehensive policies that cover physical damage and business interruption. They discuss the significance of documenting incidents to support claims and clarify the distinctions between replacement cost and actual cash value. The conversation extends to contingent business interruption insurance, addressing potential supply chain losses and service interruptions due to utility failures. They also outline civil authority coverage and the challenges posed by recent pandemic experiences on claims processes. Throughout the episode, Liam and Wes advocate for prompt claims filing, diligent documentation of recovery efforts, and the necessity of persistence if claims are denied. They encourage business owners to periodically review their insurance needs to adapt to changing conditions. This episode serves as an essential guide for business owners, particularly in hurricane-prone regions, underscoring the importance of being proactive in their insurance strategies.
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Listen to our sister show, Next Gen DDS! An all-in-one resource for dental students, residents, and early career doctors, discussing both clinical and business aspects of dentistry, hosted by Wes Lyon and Dr. Scott Menaker.
More dentists than ever are seeking out independent, objective, financial advice. In a world recently flooded with private equity money, lower dental insurance reimbursements, and questionable tax advice, it can be tough to see through the fog and answer the most important question, how can a dentist make more money? Join your host Wes Lyon as he helps you see clearly through the fog of dental office financials, allowing you to concentrate on delivering quality dental care.
Wes prides himself in offering independent, uncensored, objective advice to help dentists increase practice profitability, make better practice management decisions, and improve their personal financial planning. Whether you’re a recent graduate, new owner, in the stride of your career, or considering a transition into retirement, the Drilling It Down Podcast will help you make more money, pay less tax, and reach financial independence earlier.
About Us
McGill and Lyon Dental Advisors is an independently owned one-stop financial services resource for the dental profession, based on their "every step of the way" team approach. Their team offers financial consulting services and continuing education seminars exclusively for dentists nationwide. Throughout the years more than 30,000 doctors nationwide have trusted McGill and Lyon Dental Advisors for objective advice to reach their financial goals.
Aside from their consulting, transition, and continuing education services, the group also publishes The McGill & Lyon Dental Advisory, a dental business newsletter that offers valuable insights for all dentists. The McGill & Lyon Dental Advisory provides strategies and advice to help minimize federal and state income taxes, maximize practice profits, reduce overhead expenses, and create and protect your wealth. Membership includes monthly issues, searchable archives, special reports and bulletins, Q&As, financial calculators, forms, guides, letters, and more! Visit mcgilladvisory.com to subscribe!
Wes and his guests are experienced dental advisors specializing in tax planning, business planning, financial planning, wealth management, and practice transitions, who take pride in providing independent advice that puts the independent dentists’ best interests first.
Host Biography
Wes Lyon:
Wes helps dentists and specialists across the country achieve financial independence by improving practice profitability, slashing income taxes, managing dental insurance exposure, and making better personal financial decisions. Wes serves as President & CEO of Lyon Publishing Inc., President & CEO of McGill and Lyon Dental Advisors, and Managing Partner of Lyon Wealth Advisors Group, LLC. He is a highly sought after speaker making regular appearances at industry events, study clubs, podcasts, and McGill and Lyon seminars. Wes is also published in other editorials periodically and writes a Financial Management column for the Academy of General Dentistry. Before entering the dental consulting world, Wes worked in institutional investment management. Prior to that, Wes was a financial advisor specializing in helping small business owners with their personal finances.
McGill and Lyon Dental Advisors is a consulting firm providing dentists and specialists independent, objective financial advice as it relates to tax planning, business planning, and financial planning. McGill and Lyon Dental Advisors was founded in 1983 by Dr. Charles Blair and John K. McGill. Since then, the company has helped over 1,000 dentists reach their financial goals while paying the least amount of taxes required through their tax, business, and financial planning service.
Liam Fitzgerald:
Welcome back to another episode of Drilling It Down.
Liam Fitzgerald:
My name is Liam Fitzgerald. I'll be moderating today. And with me,
Liam Fitzgerald:
I have the normal host of Drilling It Down, Wes Lyon. Wes, thanks for joining.
Wesley Lyon:
Oh, yeah. Thank you for doing this. We've got a real important topic to cover
Wesley Lyon:
today for those of you in the southeast.
Wesley Lyon:
And really, too, I think this is probably, unfortunately, sometimes disasters
Wesley Lyon:
bring out. maybe I should check
Wesley Lyon:
this, but it kind of pulls out and maybe I should check this on my policy.
Wesley Lyon:
So we want to talk about business owner policy and hurricanes.
Liam Fitzgerald:
Absolutely right. And our thoughts are certainly with those that are in affected
Liam Fitzgerald:
areas. It was really devastating and crazy to see some of the effects.
Liam Fitzgerald:
Not a topic we love to cover, but one that's really important to cover as well.
Wesley Lyon:
No, especially, you know, Florida is kind of prepared for these things,
Wesley Lyon:
which it's always devastating.
Wesley Lyon:
But I think they're a little quicker to be able to get everybody up and running.
Wesley Lyon:
I mean, my parents live in Vidalia. We've got clients all up through South Carolina.
Wesley Lyon:
And then, of course, you know, about an hour and a half drive from here is western
Wesley Lyon:
North Carolina or probably not even some of these places are within an hour of us.
Wesley Lyon:
And, you know, just unprepared. I mean, I remember, Liam, we had a client in
Wesley Lyon:
that day, and we had to go to my father-in-law's house because he had a generator.
Wesley Lyon:
And I remember I'm driving to work, and I'm thinking, you know,
Wesley Lyon:
gosh, he was going to be the first one to text me. We can't go to work today.
Wesley Lyon:
I'm like, we're going to work today.
Liam Fitzgerald:
It's raining.
Wesley Lyon:
Power line falls right in front
Wesley Lyon:
of me. I'm like, oh, gosh, apparently this hurricane is actually here.
Wesley Lyon:
It's like 630 in the morning. So a lot of us just not prepared for,
Wesley Lyon:
and a lot of people ended up in some really, really bad situations.
Wesley Lyon:
And, you know, Western North Carolina is just an absolute destruction in a lot
Wesley Lyon:
of the places. But then even my parents were out of power for like three weeks.
Wesley Lyon:
Augusta, Georgia, out of power for a few weeks. And for those of you not from
Wesley Lyon:
the southeast, these aren't the real coastal areas that we're expecting it.
Wesley Lyon:
So, you know, we always get rain and things, but it's, you know,
Wesley Lyon:
kind of storm just came up through areas you wouldn't expect.
Wesley Lyon:
And usually by the time it gets inland enough to hit the mountains, I mean, it's just...
Wesley Lyon:
Nothing. It's dissipated. It's a rainstorm, but here we are.
Wesley Lyon:
So, you know, we're hoping the best and our prayers are out there for everyone who's been impacted.
Wesley Lyon:
But for those of you that, you know, have been impacted and now it's time to
Wesley Lyon:
figure out what we're going to do, looking at your insurance coverage is probably
Wesley Lyon:
your number one thing you should be doing.
Liam Fitzgerald:
Absolutely. We all know that we have business owners policies and hey,
Liam Fitzgerald:
if something happens, if we have some equipment that breaks sometimes will fall on that.
Liam Fitzgerald:
But when truly we're talking to some owners right now that they have not been
Liam Fitzgerald:
able to open their doors or they have were severely stunted as far as their
Liam Fitzgerald:
growth and what they were expected to produce because of the storm.
Liam Fitzgerald:
So when we take a look underneath the hood of some of these policies,
Liam Fitzgerald:
what is in here that might be able to start protecting us?
Wesley Lyon:
Yeah, the first thing you're looking at, if you had physical damage,
Wesley Lyon:
it's going to be a whole lot easier to prove.
Wesley Lyon:
So physical damage, generally speaking, first and foremost,
Wesley Lyon:
if a tree fell onto something or it got flooded in your equipment,
Wesley Lyon:
typically that's going to be covered under physical damage, which we're not
Wesley Lyon:
going to spend a ton of time on physical damage. That's pretty cut and dry.
Wesley Lyon:
Most of us know we have that coverage in place, but this brought in some trickier areas.
Wesley Lyon:
But before we kind of jump through, if you do have physical damage,
Wesley Lyon:
try to document as much of the before as you possibly can.
Wesley Lyon:
Pictures are going to go a long, long way to proving your case.
Wesley Lyon:
So make sure you've got all the before. You know, you don't want the insurance
Wesley Lyon:
company or the adjuster to come in and say, well, I saw it and it looked dry to me.
Wesley Lyon:
Well, as you must have saw it after we got to cleaning it out because,
Wesley Lyon:
you know, it wasn't that dry.
Wesley Lyon:
So the more documentation that you have, the absolute better it's going to be.
Wesley Lyon:
You know I was looking through a couple policies my own being one of them just
Wesley Lyon:
to see hey what of this do I have like what would have happened to us should something this gone on,
Wesley Lyon:
good news is a lot of these policies will be written at replacement cost so
Wesley Lyon:
if your x-ray machine is 20 years old you know and it's only valued at ten thousand
Wesley Lyon:
dollars hopefully your policy is looking at replacement cost and not actual
Wesley Lyon:
value of there because replacement cost to be a whole lot more.
Wesley Lyon:
I mean, even here, I mean, we kind of laugh with our furniture is,
Wesley Lyon:
you know, from who knows when, you know, as far as what it would take at auction to replace it. Yeah.
Wesley Lyon:
You know, it's not going to auction off for a lot of value, but to get somebody
Wesley Lyon:
in here and furnish this whole building would be astronomical.
Wesley Lyon:
So, that's the first thing is hopefully it's at replacement cost. Document everything.
Wesley Lyon:
You know, you have to look in the policy, but a lot of them,
Wesley Lyon:
they'll pay if there's physical damage within a certain number of feet of the premise as well.
Wesley Lyon:
So, whether or not it's when, you know, I looked at mine, I think I had 1,000 feet.
Wesley Lyon:
So an example of that on the business owner's policy could be that,
Wesley Lyon:
hey, a tree fell and we couldn't actually access the building.
Wesley Lyon:
And, you know, in our case, probably cleaned up pretty quickly.
Wesley Lyon:
But maybe, you know, you had a sinkhole in the parking lot and you can't access
Wesley Lyon:
the building or a sinkhole on the roadway to get there.
Wesley Lyon:
That's going to be physical damage and it's likely to get covered.
Wesley Lyon:
So you need to make sure that you do do that.
Wesley Lyon:
But really, the first one, we talk about physical damage to the actual facility,
Wesley Lyon:
but that kind of leads in well to what we're looking for, which is,
Wesley Lyon:
you know, it could potentially be physical damage that interrupts your ability to practice.
Wesley Lyon:
And that would be covered under either business interruption or business income insurance.
Wesley Lyon:
Now, the key provision here is usually the business interruption or the business
Wesley Lyon:
income, whichever one it's called, that usually takes physical damage.
Wesley Lyon:
So, you know, sinkhole pops up and nobody can access your practice and that's
Wesley Lyon:
the only way in or out That's physical damage Even if it's not necessarily within
Wesley Lyon:
that thousand feet That business interruption coverage could trigger over that
Wesley Lyon:
physical damage So it could be a tree fell on the building.
Wesley Lyon:
You know, it could be all the equipment got taken out It could be potentially
Wesley Lyon:
that there was physical damage in the parking lot But that's going to trigger
Wesley Lyon:
that business interruption coverage However.
Wesley Lyon:
This is where things get tricky And a lot of people might not Have physical
Wesley Lyon:
damage But they have financial damage And that's where we really have to dive in there And look at,
Wesley Lyon:
hey, how can we try to recover some of this? And should the insurance company pay?
Liam Fitzgerald:
Makes a lot of sense there. And as far as documents that, hey,
Liam Fitzgerald:
we can't take a picture of a tree that's in the middle of our parking lot,
Liam Fitzgerald:
were there financial documents or something that would showcase that as well?
Wesley Lyon:
Now, there definitely are. But before we get there, I think we got to dive in
Wesley Lyon:
and figure out what are these coverages and do we have them?
Wesley Lyon:
Now, this is one where not everybody's going to love the answer because these
Wesley Lyon:
are not all standard coverages.
Wesley Lyon:
A lot of them will be, and you very well may have them. I'm not going to say
Wesley Lyon:
that you necessarily have to have a super special policy to have these.
Wesley Lyon:
However, as we go through kind of these different things that could trigger
Wesley Lyon:
in a policy, I will say I did not have all of them.
Wesley Lyon:
I just pulled my own policy to say, well, what's the reality of a dentist claiming this?
Wesley Lyon:
I've got a standard Hartford business owner's policy.
Wesley Lyon:
We didn't think through a lot of this, just like a lot of the doctors,
Wesley Lyon:
because we're not scared of this.
Wesley Lyon:
We're worried about the building catching on fire.
Wesley Lyon:
We're worried about the tree falling on it. We're not usually stressed out about
Wesley Lyon:
our ability to actually come to work each day.
Wesley Lyon:
So the first one that we want to look at is contingent business interruption insurance.
Wesley Lyon:
Now, this one is probably most prevalent to Western North Carolina.
Wesley Lyon:
It could also be prevalent, though, in the Southeast as well and Florida.
Wesley Lyon:
And, you know, this one really is going to cover you for any supply chain issues.
Wesley Lyon:
So, let's say, you know, you can practice, but the lab is closed, right?
Wesley Lyon:
Maybe you have a generator, but the lab does not.
Wesley Lyon:
And now all of a sudden you can practice, but all you can really do is cleanings
Wesley Lyon:
because you don't have a lab.
Wesley Lyon:
Well, contingent business interruption coverage can cover that.
Wesley Lyon:
Now, depending on how much your damage really was, you know,
Wesley Lyon:
you have to get through the deductible.
Wesley Lyon:
So if you still did the same level of revenue and you just pushed the crowns
Wesley Lyon:
out and did other procedures, you're unlikely to get a claim.
Wesley Lyon:
However, if you truly couldn't get supplies delivered or you couldn't have access
Wesley Lyon:
a lab and it really impacted your ability to practice, then absolutely this
Wesley Lyon:
could trigger and you could have a claim on contingent business interruption insurance.
Wesley Lyon:
So, again, it's kind of the same thing as business interruption,
Wesley Lyon:
it's just no physical damage.
Wesley Lyon:
We had something else in the coverage that was causing us not to be able to
Wesley Lyon:
generate the revenue that we're supposed to.
Wesley Lyon:
So, you know, if you think of like an ortho practice and,
Wesley Lyon:
Maybe they want to be open, but they're doing largely Invisalign.
Wesley Lyon:
They can't get any of their Invisalign in.
Wesley Lyon:
Well, that stinks, and that could significantly hamper our ability to do anything.
Liam Fitzgerald:
Sure, sure. And I'm sure once these labs are getting back up in order,
Liam Fitzgerald:
whatever that supply chain is, you might not be the first on the list.
Liam Fitzgerald:
So there might be a little bit of a residual effect as well. Definitely.
Wesley Lyon:
And then in Western North Carolina, especially, you know, if you can't get to
Wesley Lyon:
your supply company, if you're in Western North Carolina, just about all these
Wesley Lyon:
might trigger right now.
Wesley Lyon:
But another one, you know, hey, the lab is in Charlotte. The lab's open,
Wesley Lyon:
but they ain't going to deliver to me.
Wesley Lyon:
Well, that would be business interruption on the contingent portion of it.
Wesley Lyon:
So there's two business interruptions and you need to check for each of them.
Wesley Lyon:
If you have no physical damage, now you're looking for contingent.
Wesley Lyon:
But we got kind of a laundry list here. We got three or four more to get through.
Liam Fitzgerald:
Yeah, absolutely. And I know when, Wes, you and I kind of live south of Charlotte,
Liam Fitzgerald:
and when I was driving and passed into South Carolina, so all these linemen
Liam Fitzgerald:
start to drive, and these trucks heading down to South Carolina, presumably to Georgia,
Liam Fitzgerald:
because there were so many different power outages, right?
Liam Fitzgerald:
And I know that's a common one when we think of service interruption.
Liam Fitzgerald:
Is that right on the same ballpark there?
Wesley Lyon:
Yeah, so service interruption coverage. This is going to be a big one that I
Wesley Lyon:
think a lot of people could get claims off of.
Wesley Lyon:
I mean, it was just, it was weeks in the Southeast for a lot of people in areas
Wesley Lyon:
you're not expecting it. I mean, my...
Wesley Lyon:
My parents are in Vidalia. It's not hurricane territory. I mean,
Wesley Lyon:
it's Southeast Georgia, so it's not unheard of, but it's pretty unheard of not
Wesley Lyon:
to have power for three or four weeks down there.
Wesley Lyon:
So if you don't have power and you can operate your practice for three or four
Wesley Lyon:
weeks, service interruption coverage is really what would cover you because
Wesley Lyon:
the utilities weren't working.
Wesley Lyon:
So that's going to be a key provision in there, which, you know, I don't know.
Wesley Lyon:
I think I had service interruption coverage. I think I did.
Liam Fitzgerald:
Let's go.
Wesley Lyon:
I was looking through because I thought, I said, maybe I have a claim here.
Wesley Lyon:
And then, you know, we fortunately had great clients.
Wesley Lyon:
One of them did at the kitchen table and the other flew back in a week later.
Wesley Lyon:
He had not taken off yet. So I didn't make a claim, but service interruption
Wesley Lyon:
coverage certainly could. And I think will trigger for a lot of doctors out there.
Liam Fitzgerald:
Yeah, no, it makes a lot of sense. And I know another one that we look at and
Liam Fitzgerald:
probably one of your favorite ones, when the government starts to order businesses
Liam Fitzgerald:
to do things and not do things, But certainly in Western North Carolina,
Liam Fitzgerald:
there's probably some times when the city of Asheville or another area,
Liam Fitzgerald:
they have a government order that's saying we cannot do business in this area
Liam Fitzgerald:
for probably some good reason.
Liam Fitzgerald:
Talk to me more about if the government steps in.
Wesley Lyon:
Yeah, so civil authority coverage, this is going to be a sore spot for a lot
Wesley Lyon:
of people because, as it turns out, pandemics were excluded.
Wesley Lyon:
So a lot of the people wanted to go to their insurance over the COVID-19 pandemic
Wesley Lyon:
and found out that although there was civil authority coverage, it excluded pandemics.
Wesley Lyon:
A lot of them exclude terrorist attack, exclude things like that.
Wesley Lyon:
So civil authority coverage is typically due to a governmental order restricting access.
Wesley Lyon:
And in North Carolina, I believe there was a governmental order that we were
Wesley Lyon:
necessary travel only out in Western North Carolina.
Wesley Lyon:
And I know we know this because.
Wesley Lyon:
We were in Charlotte, it's about as far west as you were supposed to go on many of the highways.
Wesley Lyon:
You know, we would just be driving and all the billboards basically said,
Wesley Lyon:
do not go west on the following highways unless you have an emergency.
Wesley Lyon:
So, you know, if there was a travel order, and this is where I think in Western
Wesley Lyon:
North Carolina, though, it's kind of like they better be paying because if we
Wesley Lyon:
got any one of these, we're going to be getting paid off of it.
Wesley Lyon:
But, yeah, you know, if there were road closures, you know, telling people not
Wesley Lyon:
to come travel to your area, which I do believe they lifted it recently for
Wesley Lyon:
Western North Carolina, where you can travel there.
Wesley Lyon:
Or let's at least hope, because my father-in-law, he decided he was going to go up there.
Liam Fitzgerald:
Oh, boy.
Wesley Lyon:
We'll find out if he's listening to our podcast or not. But, yeah, he did go up there.
Wesley Lyon:
My mother-in-law made him bring supplies. He was, you know, checking on his
Wesley Lyon:
son's house and said, well, maybe you better bring some supplies before they
Wesley Lyon:
ask you what you're doing. And you say you're going up to a rich person's house.
Liam Fitzgerald:
Exactly. Just coming for the view.
Wesley Lyon:
But, yeah, that could trigger in is a lot of roadways where,
Wesley Lyon:
you know, do not travel even if they were there.
Wesley Lyon:
But that kind of rolls right into this next one that could be more likely to
Wesley Lyon:
cover, which is ingress, egress. Did I say that right?
Liam Fitzgerald:
I can't not harm you there. I would have said the same.
Wesley Lyon:
This really covers you for the same thing, except if there's not a governmental order.
Wesley Lyon:
So, you know, we've seen the pictures because we're close to it.
Wesley Lyon:
But for those of you who haven't, you know, there's roads missing in Western North Carolina.
Wesley Lyon:
I mean, there's towns missing in Western North Carolina. And there's a ton of
Wesley Lyon:
roads that just, you know, got swept away. I mean, rivers removed.
Wesley Lyon:
So, I mean, getting somewhere is not easy. And...
Wesley Lyon:
You know, unfortunately, I don't think this will be everyone's practices,
Wesley Lyon:
but there are people probably have practices that, you know,
Wesley Lyon:
could be blocked from entrance for quite some time just due to the road not being there anymore.
Wesley Lyon:
And this is the coverage that would typically pay. So it's very similar to civil
Wesley Lyon:
authority in that, you know, your customers can't get to you.
Wesley Lyon:
However, this one typically isn't going to require a civil order.
Wesley Lyon:
Makes sense. A little interesting, too. it may or may not require physical damage.
Wesley Lyon:
So as I was looking into this, there were a couple of court cases,
Wesley Lyon:
and actually they were out in eastern North Carolina, where the insurance company
Wesley Lyon:
said, hey, we're not paying a claim, and we're not paying because there's no damage.
Wesley Lyon:
And, you know, I believe it was actually a dentist.
Wesley Lyon:
I can't recall off the top of my head when I was doing this research,
Wesley Lyon:
but then I said, well, yeah, that's what the road looked like,
Wesley Lyon:
and there's no way, you know, anyone was traveling to me that day,
Wesley Lyon:
you know, this was absurd.
Wesley Lyon:
And, you know, the courts actually ruled in favor of the doctors to say that,
Wesley Lyon:
you know, hey, and it might not have been doctors, might have been someone else,
Wesley Lyon:
but the courts ruled in favor of the businesses saying, hey,
Wesley Lyon:
nobody in their right mind could actually get to this business. So you need to pay up.
Wesley Lyon:
So that's what's going to cover you, you know, doesn't necessarily require that
Wesley Lyon:
physical damage, but some do.
Wesley Lyon:
So every policy is going to be written a little bit different there.
Wesley Lyon:
But these are not all the coverages people need to be looking at.
Wesley Lyon:
I just think these are some of the more in the weeds one that maybe people aren't
Wesley Lyon:
as familiar with. Then you'd be going, hey, do I have that?
Wesley Lyon:
If I was searching through my policy right now and I was sitting in one of these
Wesley Lyon:
places, I don't know as much when I was local about how shut down Florida was.
Wesley Lyon:
But if you're in Florida, Georgia, South Carolina, Western North Carolina,
Wesley Lyon:
and you had issues, I'm 100% going, I'm pulling my business owner policy,
Wesley Lyon:
and I am on the hunt for these terms.
Liam Fitzgerald:
Yeah, absolutely. And you're really in the weeds in this, certainly as a business
Liam Fitzgerald:
owner, pretty familiar with this stuff. But if we have some business owners
Liam Fitzgerald:
listening right now, and they're like, this is some of the first times I'm hearing
Liam Fitzgerald:
of these coverages, how do they know?
Liam Fitzgerald:
Does the insurance company decide which coverage it is? Does their broker help
Liam Fitzgerald:
them? How do they go about deciphering these?
Wesley Lyon:
Yeah, well, the first thing everyone needs to do is pull their business owner's
Wesley Lyon:
policy. You might have it. It actually got physically delivered.
Wesley Lyon:
Some of us get them electronically delivered. We don't have full physical copies.
Wesley Lyon:
So for me, I was able to log into the Hartford, pull a PDF of my policy in about 30 seconds.
Wesley Lyon:
If you can't do that and you don't have it, contact your broker,
Wesley Lyon:
your agent, get a hold of your policy. That's going to be the first thing.
Wesley Lyon:
Once you have it, read it. You don't necessarily need to read every word,
Wesley Lyon:
Generally speaking, these coverages are going to be grouped together.
Wesley Lyon:
So get to the section on the business interruption insurance.
Wesley Lyon:
I mean, these policies are kind of all-encompassing. So mine's like 284 pages,
Wesley Lyon:
right? I don't need my employment practices liability.
Wesley Lyon:
I'm not reading that section right now. I'm not too concerned about that.
Wesley Lyon:
I am concerned about these things. So go in, look for them, see which ones you
Wesley Lyon:
have, see which ones you don't have.
Wesley Lyon:
I would start highlighting them so when you talk to your agent,
Wesley Lyon:
your broker, that you're really informed. because your agent broker,
Wesley Lyon:
some of them have more experience than others, but some of them don't have a
Wesley Lyon:
ton of claims experience.
Wesley Lyon:
And, you know, be patient on some of this stuff because especially if,
Wesley Lyon:
you know, we're sitting here in areas that aren't used to dealing with this.
Wesley Lyon:
So the chances of your broker knowing everything on this 284 pages and going,
Wesley Lyon:
yeah, absolutely, I've seen this before.
Wesley Lyon:
Probably not. Now, down in Florida, hammer them.
Liam Fitzgerald:
They've seen it.
Wesley Lyon:
I hope you know what this stuff is in Florida. But the inland communities that
Wesley Lyon:
have been impacted, you know, it's unlikely anyone really knows a ton about this.
Wesley Lyon:
So you just got to dig into the details.
Wesley Lyon:
And, you know, another piece of advice I have is don't trust anyone else's opinion
Wesley Lyon:
on it more than your own because they're not the ones sitting there suffering the financial losses.
Wesley Lyon:
So you really want to dig into this thing for yourself.
Wesley Lyon:
It's not a bad idea, depending on the extent of your damage,
Wesley Lyon:
to call an attorney to help you fill out the form.
Wesley Lyon:
So I'm not entirely against that.
Wesley Lyon:
I was actually looking at McGuire Woods' website. They were very helpful.
Wesley Lyon:
But just having somebody give the second look over and make sure everything's in good order.
Wesley Lyon:
If you're filing a small claim, I may not worry about it.
Wesley Lyon:
But if your entire business has been taken from you, you're going to want to
Wesley Lyon:
dig through every nook and cranny
Wesley Lyon:
of that policy and make sure that you're getting paid out to the maximum.
Liam Fitzgerald:
Fair enough. And there's a reason that you're writing articles about this now
Liam Fitzgerald:
while recovery efforts are still happening.
Liam Fitzgerald:
There's a reason we're talking about this now. We don't want to think about
Liam Fitzgerald:
this a year from now when businesses are fully reopened, right?
Liam Fitzgerald:
There's a timeliness factor of this too. Is that right?
Wesley Lyon:
There is. So every policy is going to be a little bit different,
Wesley Lyon:
but you have to file a timely claim.
Wesley Lyon:
Now, it's going to be tough for a lot of people. They don't have all the information.
Wesley Lyon:
So if you think you can get a claim, you can file a notice of claim,
Wesley Lyon:
and your broker should be doing this on your behalf.
Wesley Lyon:
So whoever your broker is, your agent, you need to call them up and at least file a notice of claim.
Wesley Lyon:
That way, they know that you have suffered damage.
Wesley Lyon:
Like I know in North Carolina...
Wesley Lyon:
Forget his name, but he was just on the ballot. I just voted.
Liam Fitzgerald:
There we go.
Wesley Lyon:
I think it's the insurance commissioner, but he issued a 60-day,
Wesley Lyon:
I think, like a moratorium.
Wesley Lyon:
I'm probably screwing up the language, but he basically gave, said, hey,
Wesley Lyon:
everybody's got 60 days to figure their stuff out, so all you insurance companies,
Wesley Lyon:
don't you dare try to deny someone a claim because, you know,
Wesley Lyon:
they can't have access or they don't have access to even file it,
Wesley Lyon:
and they didn't get it in timely.
Wesley Lyon:
So he did put that in there, but you need to make sure this claim is timely.
Wesley Lyon:
So the sooner we give them notice, the better it's going to be.
Wesley Lyon:
You know, we get them notice a year later, they're probably going to deny the claim.
Liam Fitzgerald:
I see. Okay. And then, so claiming first, I recall you said taking a lot of
Liam Fitzgerald:
pictures as well and making sure we're recovered.
Liam Fitzgerald:
Even if we're not fully recovered yet, hey, we want to make sure we're getting
Liam Fitzgerald:
this evidence now before that cleanup happens.
Wesley Lyon:
Yeah. Yeah, another key thing you want to do is you want to take note of all
Wesley Lyon:
the processes you went through to get back up and running.
Wesley Lyon:
So a lot of these insurances, like let's say the business interruption is going to trigger.
Wesley Lyon:
Well, you can't just leave the tree there for six months and then expect them
Wesley Lyon:
to pay you revenue for a year when it takes six months to build.
Wesley Lyon:
You need to process that you were on this, trying to get your business back
Wesley Lyon:
up and running in a reasonable time.
Wesley Lyon:
So if you don't have it documented, everything you were doing,
Wesley Lyon:
you know, hey, you know, the tree was on the roof and I really tried to get
Wesley Lyon:
the tree out my best I could the next day.
Wesley Lyon:
It took a month because we were so backed up in this area and I wasn't the priority.
Wesley Lyon:
You know, we had people, they were searching for people trying to get survivors.
Wesley Lyon:
My tree was not that important. You know, it might have taken three months.
Wesley Lyon:
Well, you don't want to be in a battle with the insurance company over what
Wesley Lyon:
a reasonable period of time is with no evidence, right?
Wesley Lyon:
If neither side has any evidence, you're going to end up fighting a legal battle.
Wesley Lyon:
Instead, have all the evidence. I contacted them on this date.
Wesley Lyon:
You know, I got myself on the list as soon as I could. Everything you did to
Wesley Lyon:
get back up and running, you want to make sure is documented.
Wesley Lyon:
You have notes. when the phone calls were what was
Wesley Lyon:
said on the phone call just overly document this
Wesley Lyon:
stuff proving that you were doing your best because there
Wesley Lyon:
are i mean there are some areas they're going to take years probably to come
Wesley Lyon:
back from it uh you know to get fully up and running and there are probably
Wesley Lyon:
some dental practices that won't be up and running for over a year so you know
Wesley Lyon:
you just don't want to get into a battle with the insurance company over how
Wesley Lyon:
much this is going to pay out for you So,
Wesley Lyon:
documentation is key.
Wesley Lyon:
Over document, you know, don't think the insurance company is going to take
Wesley Lyon:
your word for it on the back end.
Liam Fitzgerald:
Makes a lot of sense there. And I'll go a little off script just because I'm
Liam Fitzgerald:
curious. For those severely devastated areas, we think Asheville,
Liam Fitzgerald:
we think Western North Carolina, that it might take years for a full recovery.
Liam Fitzgerald:
Is the insurance company going
Liam Fitzgerald:
to wait until all of the damage happens and then pay you in a lump sum?
Liam Fitzgerald:
Do they kind of pay you ongoing? Is there any precedent for something like that?
Wesley Lyon:
Yeah, generally speaking, the adjuster is going to come out.
Wesley Lyon:
So physical damage, you know, they should give you a check for to get you back
Wesley Lyon:
up and running to go spend.
Wesley Lyon:
So that's physical damage. It's business interruption stuff.
Wesley Lyon:
They should be paying, you know, as soon as you can prove the claim.
Wesley Lyon:
So the sooner you're filing, the better.
Wesley Lyon:
But, yeah, there is precedent. Generally speaking, they're going to write you
Wesley Lyon:
a check. I mean, insurance companies, if you want to know who buys all of the
Wesley Lyon:
bonds out there, it's largely insurance companies.
Wesley Lyon:
They don't invest the same way that we do. We invest for a liability for somebody's spending, right?
Wesley Lyon:
And that liability is down the road. Well, insurance companies invest knowing
Wesley Lyon:
they have to make claims out. So they need to be very, very liquid.
Wesley Lyon:
Their returns are not very high because of this comparatively.
Wesley Lyon:
I mean, not a bad thing. And again, they just know situations like this will
Wesley Lyon:
arise and they have to have reserves.
Wesley Lyon:
And then a lot of them, what they'll do is they will reinsure risk.
Wesley Lyon:
So there's an entire industry, for those of you who don't know,
Wesley Lyon:
of insurance companies for insurance companies. We call it reinsurance.
Wesley Lyon:
And, you know, these companies are saying, you know, let's just say my wife
Wesley Lyon:
works at the Hartford and the Hartford actually does my business owner's policy.
Wesley Lyon:
And it's kind of their bread and butter. So I'd be shocked if we had less than
Wesley Lyon:
half of our audience who has a Hartford policy.
Wesley Lyon:
I would assume it's 50% or more has a Hartford policy.
Wesley Lyon:
Well, the Hartford, you know, if they're writing every single business owner
Wesley Lyon:
in the southeast, they want to go get some reinsurance over an event like this.
Wesley Lyon:
So they're going to say, hey, we have the financial stability to cover up to this amount.
Wesley Lyon:
And, you know, whether it's $100 million, $200 million, I don't really know
Wesley Lyon:
insurance that well. But they've kind of got a ceiling, at which point they'll
Wesley Lyon:
go out to these reinsurers and they'll go to the reinsurers and say, you know, hey, we bid.
Wesley Lyon:
We actually want to buy an insurance policy of what will happen if an event
Wesley Lyon:
happens and we're on the hook for more than X amount of dollars.
Wesley Lyon:
So that reinsurance company, they also have liquidity expectations.
Wesley Lyon:
So there should be liquidity in order to pay for this stuff.
Liam Fitzgerald:
Makes sense.
Wesley Lyon:
So we hope everyone gets paid out as quickly as possible, but having this documentation
Wesley Lyon:
is absolutely going to be key for it.
Liam Fitzgerald:
That's really, really helpful. And to that point, it sounded like P&Ls,
Liam Fitzgerald:
financial documents, are probably your friend in this case of showing here's
Liam Fitzgerald:
what we did this October to November and here's what we did the last one, right?
Wesley Lyon:
Yeah. So if you're going after one of these more obscure coverages,
Wesley Lyon:
the physical damages, pictures of the physical damage, you know, what it impacted.
Wesley Lyon:
The more pictures, the better. If you're going after one of these other ones,
Wesley Lyon:
you need to have a picture and a story revolving around the cause,
Wesley Lyon:
whether or not it's you have a copy of the governor's order or you have...
Wesley Lyon:
Pictures of the roadway that was let in or news reports, whatever it may be
Wesley Lyon:
that's reporting and showing and providing that story that you're telling on why there was an impact.
Wesley Lyon:
So you need to have the subjective piece of it, which is why this happened and
Wesley Lyon:
why it's an insurable event.
Wesley Lyon:
That's the subjective piece. The objective piece is your financial documents, right?
Wesley Lyon:
You've got your P&Ls, you've got the revenues, you've got the bank account statements,
Wesley Lyon:
you can prove you were impacted.
Wesley Lyon:
I mean, and the reason you need both is just because you were down doesn't mean
Wesley Lyon:
you got an insurable event that happened.
Wesley Lyon:
You know, I'm a bad business owner and we just didn't collect money for two months.
Wesley Lyon:
Well, the insurance company ain't bailing you out there and that's what they're trying to be sure of.
Wesley Lyon:
So yeah, the more documentation that you have there, absolutely the better.
Wesley Lyon:
But P&Ls and bank statements are gonna be your friend.
Liam Fitzgerald:
That's huge. That's really good to know. And then a final question for you that
Liam Fitzgerald:
I have is order of operations, right?
Liam Fitzgerald:
We keep hearing that FEMA is on the ground and there might be some federal support
Liam Fitzgerald:
for some of these affected areas.
Liam Fitzgerald:
But I'm sure our audience isn't shocked to hear that the federal government
Liam Fitzgerald:
might take some time to actually pay out. And we're probably talking years for that.
Liam Fitzgerald:
So probably looking at the private insurance first before counting on government funds.
Wesley Lyon:
Yeah, I've never actually had to deal with FEMA. So, this will probably be some
Wesley Lyon:
of our first times here going through and getting federal funding.
Wesley Lyon:
However, the Stafford Act, did I get that right?
Liam Fitzgerald:
That's right.
Wesley Lyon:
Okay. Going off the top of my head here, the Stafford Act, which I believe was
Wesley Lyon:
passed in 2023, it's pretty recent, though, on the Stafford Act,
Wesley Lyon:
is going to require that FEMA pays second, or pays last.
Wesley Lyon:
So if you're in a devastated area and we need FEMA funds, basically what FEMA
Wesley Lyon:
is saying is, look, we are not on the hook for what insurance is supposed to pay.
Wesley Lyon:
We are not a bailout to the insurance companies.
Wesley Lyon:
So if you go and you just say, oh, FEMA is coming to clean up our area and you
Wesley Lyon:
don't file an insurance claim and FEMA finds out about it, FEMA is not going
Wesley Lyon:
to pay you because you didn't file an insurance claim.
Wesley Lyon:
So even if you get rejected from everything, you need to file the claim.
Wesley Lyon:
You need to give your best effort to get the money. Now, the insurance should
Wesley Lyon:
pay for those. If you're receiving FEMA money,
Wesley Lyon:
and you're not receiving insurance money, there's something wrong.
Wesley Lyon:
So, you need to make that notice of claim as soon as possible.
Wesley Lyon:
But yes, that will be, you know, don't sit back and rely on the FEMA money because
Wesley Lyon:
they find out you didn't file an insurance claim and they're going back out
Wesley Lyon:
of paying and you're going to be left with nothing.
Wesley Lyon:
So, that's an extremely important thing to go ahead and get covered.
Liam Fitzgerald:
Incredibly important. And then I know that kind of central theme is We don't
Liam Fitzgerald:
really want to take no for an answer right away, right?
Liam Fitzgerald:
Insurance, they are a business too. So they are going to fight against your full claim probably.
Liam Fitzgerald:
And that's not because they're trying to be mean, but that's their service model.
Liam Fitzgerald:
So if they get that initial no, it sounds like, hey, we're not going to necessarily
Liam Fitzgerald:
accept that and lay down for it. Is that right? That's exactly right.
Wesley Lyon:
So if you get a no from any of these, you know, make sure you fight it.
Wesley Lyon:
You can always contact your state insurance board.
Wesley Lyon:
That's one way. So especially if, you know, you think yours is covered,
Wesley Lyon:
get with your dental colleagues, right?
Wesley Lyon:
If there's a group of you and they're denying all of you, go to the state insurance board as a group.
Wesley Lyon:
Maybe you've got somebody on the state dental board that can go contact them
Wesley Lyon:
on everyone's behalf. But go as a group, you know, don't just lay down if you
Wesley Lyon:
think you deserve money.
Wesley Lyon:
Most of the large claims I don't suspect there will be much fighting on.
Wesley Lyon:
But some of these provisions in here, they're a little less common.
Wesley Lyon:
I'm not going to be surprised to get kickback on them. Like some of them,
Wesley Lyon:
oh, your policy excludes hurricanes.
Wesley Lyon:
Well, which provision in the policy excludes hurricanes?
Wesley Lyon:
Is it my business interruption or was the hurricane the cause or was my utility being out the cause?
Wesley Lyon:
So don't just lay down if somebody tells you, oh, hurricanes are excluded.
Wesley Lyon:
You're on your own. No, it could be true, but it might not be true because there's a reality here.
Wesley Lyon:
A lot of people are going to discover that they don't have the provision they would have needed.
Wesley Lyon:
So that's why this is a good time to look over your policy.
Wesley Lyon:
If you aren't in an impacted area, talk to your agent and figure out,
Wesley Lyon:
are any of these provisions something that we need to add?
Wesley Lyon:
And I give a good chuckle and a shout out to Charlie.
Wesley Lyon:
Many of our clients utilize Charlie.
Wesley Lyon:
He only really works in the Southeast, but Charlie's great.
Wesley Lyon:
Sometimes I try to get my insurance premiums cheaper, and Charlie talks me off
Wesley Lyon:
the ledge and tells me, Wes, you need this provision. I'm like,
Wesley Lyon:
I really don't. It's going to save $200 a year.
Wesley Lyon:
Well, I found more of these provisions than I thought I would in my policy, so thank you, Charlie.
Liam Fitzgerald:
Shout out.
Wesley Lyon:
Fortunately, we don't need them here. We're in good shape. But some of this
Wesley Lyon:
stuff, you don't think you need it until you do.
Wesley Lyon:
So if you don't have it, now's a good time. call up your broker,
Wesley Lyon:
call up your agent and say, hey, do we have everything we need?
Wesley Lyon:
Would this have been covered?
Wesley Lyon:
And there's another thing I'm working on I don't quite have the answer to yet.
Wesley Lyon:
I've got a contingent answer. So, we're probably going to have to do a whole
Wesley Lyon:
other episode on another type of insurance, but also the same provision could apply, which is.
Wesley Lyon:
Is replacement cost adequate? And I'm working on this for another client,
Wesley Lyon:
which really spurred it, trying to figure out if it's adequate or not.
Wesley Lyon:
And we're kind of diving into provisions of the policy.
Wesley Lyon:
It's getting pretty detailed to figure out, but I'm also curious for myself
Wesley Lyon:
because, you know, I was really thinking of it and we had another client in
Wesley Lyon:
here and the client was going to build a house.
Wesley Lyon:
And we're talking about how much it's going to be to build a house.
Wesley Lyon:
Well, well, the house they're going to build, truthfully, is about the same
Wesley Lyon:
cost as the one they're in. They don't want to renovate the one they're in.
Wesley Lyon:
However, building it from scratch, you know, he asked me, he's like,
Wesley Lyon:
well, you know, what would happen if you had to rebuild?
Wesley Lyon:
I'm like, well, it's not like you're going to the junkyard to get some of these used hardwoods, right?
Wesley Lyon:
It's not going to be any cheaper to rebuild your current one.
Wesley Lyon:
It's going to be to build this one that you're building, which is what really
Wesley Lyon:
got me thinking of what is my maximum replacement cost.
Wesley Lyon:
And I kind of looked at it in my square footage and I was like, that ain't happening.
Liam Fitzgerald:
There's just no way.
Wesley Lyon:
So I called my father-in-law who used to be CEO of Country Financial and figured
Wesley Lyon:
an insurance guy would just poke a random question.
Wesley Lyon:
I asked him, hey, have you upped your dwelling value, your replacement cost
Wesley Lyon:
and your home insurance in the last four years? And he goes, yeah, of course.
Liam Fitzgerald:
I was like, so I guess the rest of us should You'll probably be doing that too.
Wesley Lyon:
Huh? So yeah, that's another thing to look at is, hey, if I've got building
Wesley Lyon:
or build out on there, am I still adequately covered?
Wesley Lyon:
Or if I've been riding the same coverage for 10, 15 years and it hasn't gone
Wesley Lyon:
up, you know, a lot of people get upset. They think their broker is trying to sell them something.
Wesley Lyon:
They're calling them, telling them they need to raise their coverages.
Wesley Lyon:
That's probably a good broker.
Wesley Lyon:
Unfortunately, the people probably don't take it well because the premium is
Wesley Lyon:
going to go up, but it's probably keeping you in really, really good shape.
Wesley Lyon:
And that applies to the business policies, the home policies.
Wesley Lyon:
So it's something we're looking into.
Wesley Lyon:
I think there may be a provision there where there's a 20% buffer.
Wesley Lyon:
Um, that's probably policy specific, but we've got a couple of calls out and
Wesley Lyon:
we're going to be meeting with some insurance experts to figure that out.
Wesley Lyon:
But as you're meeting with them, that's another good thing to look at to go,
Wesley Lyon:
Hey, my replacement cost on this building or the value of it,
Wesley Lyon:
700,000, but my replacement cost on it might be 1.4 million.
Wesley Lyon:
And then figuring out, Hey, what's my build out cost? Was this based off the
Wesley Lyon:
build out from 20 years ago?
Wesley Lyon:
You know, is have $150,000 interior build out on there.
Wesley Lyon:
Yeah, you ain't even get the architect plans off some of the costs we have going on today.
Wesley Lyon:
So, you know, while you're in there looking, making sure you have all the right
Wesley Lyon:
provisions, make sure you have adequate coverage as well.
Liam Fitzgerald:
Very good to know.
Wesley Lyon:
So, yeah, big things to look at, but, you know, overall takeaways,
Wesley Lyon:
get your policy ASAP, make a notice of claim.
Wesley Lyon:
You don't need to make the actual claim, but make the notice of claim as soon
Wesley Lyon:
as possible that you intend on filing that claim.
Wesley Lyon:
Take as much documentation as you can. You get pictures from friends,
Wesley Lyon:
colleagues, don't care. Make sure you have all of it there.
Wesley Lyon:
And then grab financial documents.
Wesley Lyon:
And if it gets real intense, don't be scared to call an attorney and pay for
Wesley Lyon:
a few hours of time to get some help filling this stuff out.
Wesley Lyon:
And for those of you who aren't impacted, now's a good wake-up call that I think
Wesley Lyon:
we probably all need to take a look with our business owner policies and make
Wesley Lyon:
sure that everything in there is adequately covered.
Liam Fitzgerald:
Sure, absolutely. No, and our thoughts and prayers continue to be with those
Liam Fitzgerald:
in affected areas. We wanted to make sure we got this out timely and we'll continue
Liam Fitzgerald:
to think of you. But Wes, thank you so much for the advice and the time today.
Wesley Lyon:
Liam, thank you. And everyone else, we'll see you back next time.