ARKANSAS a OKLAHOMA

BOB JOHN aecudtrc vlce presl&nt

OST LUMBER dealers are concerned about physical losses to their property. That's why they purchase insurance. Too often, however, dealers neglect to insure their loss of income due to a physical loss to their property. The loss of income can close a business almost as fast as a fire.

Business intemrption insurance indemnifies the insured for losses arising from the inability to conduct business because ofdamage by fire or other named peril. This coverage, horvever, has a limited period of loss payment which is the amount of time it would generally take the insured to repair or replace damaged property under normal circumstances.

Since part ofthe loss adjustment process for a business interruption loss includes a review ofthe insured's past and present financial condition, it is essential that the insured maintain complete and very accurate records. Otherwise, the final loss adjustment may not be a true reflection of the insured's loss of income.

Business interruption insurance can be provided under many forms ofcoverage and is well suited for the classic manufacturing risk. Hcnvever, it can be a complicated coverage and is often misundentood. More times than not, it can over-complicate and delay the loss adjustment for the typical reail (and wholesale) lumber operation. We suggest dealers should look at "profits insurance" as a preferred way to prevent loss of income.

Profits insurance corrers the agreed profits or commissions of the sound value of merchandise held for sale by the insured. It provides a quick and equitable form of loss of income coverage for the retailen since they can rcco\r'er from a physical loss to their property more rapidly than manufacturers. When profits insurance is purchased the insured agrees to the average percent of profit derived from the saleof insuredstock. If allorpartof thestock is damaged by a named peril, the insured would receive not only payment for the stock but also payment for the lost profits based upon the agreed percent ofprofit. For business interruption, the insured would receive no loss

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profits payment if a shut down in operations did not occur.

The following loss example best illustrates the advanrages ofprofits coverage over business intemrption:

It is for the above reasons we think profits coverage is better than business interruption for the average retail lumber operation. Why not discuss both of these coverages in more detail when planning your insurance portfolio with your insurance agent.