In the given business example, if the property is destroyed and not restored for a full month, what is the maximum possible loss?

In the given business example, if the property is destroyed and not restored for a full month, what is the maximum possible loss?

• A. $100,000
• B. $150,000
• C. $155,000
• D. $205,000

Answer: (C)

The main idea is that business income coverage pays for the actual income you would have earned during the interruption plus any necessary extra expenses to keep the business operating, up to the policy’s limit. For a full-month disruption, you take the month’s net income lost and add the continuing expenses incurred, then cap the total at the policy limit. In this example, the monthly net income lost is 100,000 and the extra expenses to continue operations are 55,000. Adding them gives 155,000, which is the maximum amount the policy would pay for that month (assuming this does not exceed the policy limit). The other amounts are simply lower sums or would exceed the calculated need if not constrained by the limit.

The main idea is that business income coverage pays for the actual income you would have earned during the interruption plus any necessary extra expenses to keep the business operating, up to the policy’s limit. For a full-month disruption, you take the month’s net income lost and add the continuing expenses incurred, then cap the total at the policy limit.

In this example, the monthly net income lost is 100,000 and the extra expenses to continue operations are 55,000. Adding them gives 155,000, which is the maximum amount the policy would pay for that month (assuming this does not exceed the policy limit). The other amounts are simply lower sums or would exceed the calculated need if not constrained by the limit.