Business income coverage is written on an actual loss sustained basis. That means the insurer pays:
Explanation
Actual loss sustained means the insured is paid what the suspension genuinely cost in lost net income and continuing expenses during the period of restoration, proved from its own books, subject to the limit of insurance. There is no per-day sum agreed in advance, which is what separates this from a valued or stated-amount approach. Rebuilding the structure is paid by the direct property coverage, not by business income.
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Related questions on this topic
- Two buildings valued at $500,000 and $700,000 are insured under a single blanket limit of $1,200,000 with a $10,000 deductible. Fire causes a $600,000 loss to the smaller building. What is paid?
- Under business income coverage, the period of restoration ends on the earlier of the date operations resume at a new permanent location or the date on which:
- A covered fire shuts a bakery for four months. It would have earned $9,000 a month in net income, and it must keep paying $6,000 a month in continuing normal operating expenses. What is its business income loss?
- After a covered fire, a print shop rents temporary space for $12,000 a month for three months and rents replacement presses for $9,000 so it can keep filling orders. What is its extra expense claim?
- An insured elects to exclude ordinary payroll from its business income coverage. During a shutdown the policy will then not pay:
- An insured on a reporting form last reported $200,000 of stock when the true value on that date was $250,000. A covered loss of $50,000 follows. What does the full reporting condition allow?
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