Business Income Insurance

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SPECIAL QUESTION AND ANSWER ISSUE ON BUSINESS INCOME INSURANCE

EDITOR’S NOTE

Business income insurance, which covers loss of business income and continuing expenses following an insured loss, can be critical not only to a company’s prosperity, but to its very survival. An introduction to this complex insurance was addressed in our 1993 (AT93-1) issue of Adjusting Today . That issue generated a steady flow of questions relating to more specific applications of its coverage. In this special issue of Adjusting Today , Paul Dudey, CPCU, responds to six of the most often asked questions.

The importance of this coverage and its correct application cannot be understated. In an effort to further education on this topic, we invite all additional questions you may have for consideration in future issues. Please submit your questions on the attached reply card or forward them to the physical or email address on the back page.

—Sheila E. Salvatore, Editor

Business Income Insurance

Answering Tough Questions on Complex Coverage

By Paul O. Dudey, CPCU

The 1993 issue of Adjusting Today (AT 93-1) featured an excellent article on the subject of business income insurance. Since that time, this article has generated a flurry of questions on this highly technical subject. In this article we respond to some of them.

Question: Can you explain the difference between adjusting a retail claim on a selling price basis vs. using ordinary business interruption (business income) insurance?

Answer:

The settlement method for a retail claim will depend largely on the type of property involved in the loss. The standard retail selling price clause provides that property sold but not delivered shall be valued at its selling price less unincurred costs (delivery costs, etc.) and customary discounts. Thus, in a fire involving the store’s will-call merchandise the merchant can recover the profit from the sale of these goods along with its “actual cash value” (ACV).


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