A bakery is forced to close after a covered fire. Which of the following BEST describes what Business Income coverage is designed to pay?
Explanation
Business Income (often called business interruption) coverage pays the net income (net profit or loss before income taxes) that the insured would have earned, plus continuing normal operating expenses (such as payroll, rent, and utility charges), during the period of restoration following a covered direct physical loss. It does not pay for the physical repairs themselves and is not based on gross sales.
Law Reference: ISO Business Income (and Extra Expense) Coverage Form (CP 00 30)This topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
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Related questions on this topic
- A commercial building with a replacement value of $1,000,000 carries an 80% coinsurance clause. The insured purchased only $600,000 of coverage. A covered fire causes a $200,000 loss. Ignoring the deductible, how much will the insurer pay?
- An insured selects the Agreed Value optional coverage on a commercial property policy. What is the primary effect of this option?
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- Which of the following is the BEST description of a Businessowners Policy (BOP)?
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