A fine reading of most policies for “business interruption” reveals that viral outbreaks aren’t covered. Some legislators are demanding that insurance firms pay up anyway. Is it time to rethink insurance entirely?
Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.
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Here’s a riddle: name something that one of every three small businesses in the U.S. bought to protect themselves in an emergency — but when an emergency happened, it turned out to be useless. Are we talking about a burglar alarm? A sprinkler system? A gun? No, none of those. This riddle is best solved by asking an actual small-business owner.
Janice JUCKER: Janice Jucker, and I’m co-owner of Three Brothers Bakery with my husband, Bobby.
Three Brothers Bakery is in Houston; it has a few shops there and also sells online. They are particularly famous for their pecan pies. And famous for something else:
JUCKER: Our honorary titles are King and Queen of Disasters, because we’ve been through four floods, a fire, a hurricane, and now a pandemic.
The first flood was in 2001, after Tropical Storm Allison:
JUCKER: It took about three days to clean up.
Before Allison, Jucker had suggested to her husband that they ought to buy flood insurance.
JUCKER: But of course, he didn’t listen to me.
This left the Juckers on the hook for about $100,000 of damages. But it did inspire them to buy flood insurance, which would cover property damage — as well as what’s called business-interruption insurance, which would cover lost revenues in the case of a disaster. These turned out to be prudent purchases, because, in 2008:
JUCKER: In 2008, we had Hurricane Ike, and we think a tornado came down the street, ripped off the roof, and we were closed for nine months for that one. And that was about $1.2 million.
That’s $1.2 million, of damages. Which their insurance for the most part covered. And then in 2015:
JUCKER: In 2015, the Memorial Day flood, which we got about three-and-a-half feet of water, and that was a million-dollar event.
And another successful insurance claim.
JUCKER: 2016, we had the Tax Day flood, but we were getting ready to close five days later to do the repairs from 2015, so we just pushed the water out and didn’t make a claim or anything.
But Three Brothers Bakery wasn’t done being flooded. In 2017 came Hurricane Harvey:
JUCKER: It was basically a river on our street. And that was another million-dollar event. And then I think it was 2018, we had a fire in December.
So much calamity. So much property damage! But fortunately, the Juckers had continued to carry insurance.
JUCKER: If we had not had insurance, we would have been out of business.
So, Janice Jucker has come to appreciate the insurance industry — but she also understands...
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