Berkshire Hathaway’s Three Page Small Business Policy
Insurance policies are usually long and complicated. Commercial business policies can be the size of a book. It’s no wonder insureds would prefer shorter, easier to read policies. Berkshire Hathaway promises to respond with a three page policy designed for small business covering property, business income, general liability, professional liability, directors and officers liability, cyber, auto and workers compensation. (In comparison, except for workers compensation “standard” forms for a single one of these coverages run to a dozen or more pages.)
How good is this policy? Insurance commentator Bill Wilson in an online article “From 2.0 to 3” states that in a “cursory” review he observed almost 30 questionable statements or omissions. (Read the article at https://insurancecommentary.com/from-2-0to-3/.) I have read the policy, and if anything Bill’s comments are understated. It is written in plain English while including some insurance terms. However, easy to read is not always easy to understand. Traditional insurance policies use wording that has been tested over time. Just as the great pianist Vladimir Horowitz claimed he could give another concert with the notes he left out of his performances, you could write another policy – or several – with coverage terms and conditions Berkshire Hathaway’s form omits. For example, “theft” is covered but other crimes – including computer crimes – are omitted. Many common exclusions are omitted, but there is a total exclusion of contracts – standard General Liability forms carve out “insured contracts” which are part of everyday business agreements. The brief statements of “auto” and “cyber” coverage do not begin to address their complexities.
The policy is scheduled to be released in summer 2019. I suspect it will require a detailed application if underwriters really want to understand what they’re covering. Policies may require endorsements to clarify what is and isn’t covered, expanding the policy well beyond three pages. Anyone thinking of buying this policy should have their present policies available for comparison. And any agent thinking of selling them needs a library of standard forms for comparison, or substantial Errors and Omissions insurance.