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stwsam 19th March 2016 11:19 AM

Peak Season Business Insurance
Most insurance companies seem to sell their clients "Peak Season" coverage in the clients general business and personal asset coverage plans. Beware, your agent likely has no idea what this aspect of the policy covers.

In my research a peak season policy bumps a companies business and personal policy asset coverage 25% above the declarations stated in the policy. The issue is your insurance agent fails to write or describe when in your company's business year is in peak season.

In the case of my company, it was destroyed in an overnight fire in November of 2014. The nightmare for our small company that manufactures custom wood doors for customers across North America, was that our fire occurred during our most intense time of the year. In the residential construction industry, projects are scrambling to be completed as close to the Christmas holiday season as possible. For our company, orders pour in after labor day and continue until around Thanksgiving. Our lead times grow form 7 to 8 weeks at that time of the year to 9 to 11 weeks as we simply cannot build our product fast enough to keep up. Of course when this time occurs, it is also the time of the year that we let most customers down due to a lead time growing beyond their expectations.

At the time of our fire, our small company that does just under two million a year in sales lost everything. Our inventory was its highest for the year and we had $205,000 in customer deposits for product. Exacerbating our pain was that our agent failed to keep up with our company's growth of assets in our equipment and inventory. Our insurer, Erie, declared we had no recognizable peak season,yet they had sold us this policy for 8 years. We were put through incredibly tedious exercises, spent $7,000 working with our account only to be declined twice. Providing 36 months of balance sheets and analysis proved futile.

More importantly, and the thrust of my post is that we found our insurer, Erie, had no definition for "Peak Season" coverage. NONE! We approached Erie with legal representation to find the same lack of definition. We appealed to the state of Pennsylvania's insurance commission asking why an insurer is allowed to sell a non-defined policy for which we go a response that there was nothing in the states insurance charter to handle such an issue.

We now have filed suit against Erie. Researching the best we could, it seems many insurers will under write a peak season policy for a client to declare the times of year that the company works at its peak level. My advice is check your policy and have your agent, through proof of declaration in specificity, declare when your peak coverage is in effect. I assure you, many agents will simply have the "deer in the headlights" look when they come back from their underwriters. The underwriters are very hesitant to write the parameters of this policy and the adjusters run from paying out.

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