Commercial PropertyQuestion 103 of 215
A bakery is forced to close after a covered fire. Which of the following BEST describes what Business Income coverage is designed to pay?
a.The cost to physically repair the bakery's ovens and building
b.The bakery owner's personal medical bills
c.The net profit the bakery would have earned plus continuing normal operating expenses during the period of restoration
d.The full gross sales of the bakery for the entire policy term
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)Practice all 215 questions free — no signup required.
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