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What is the name of the insurance that protects businesses from income loss due to disruptions?
What is the name of the insurance that protects businesses from income loss due to disruptions?
Business Interruption Insurance
What is the reduction in earnings a business experiences due to an interruption in operations called?
What is the reduction in earnings a business experiences due to an interruption in operations called?
Income Loss
What are costs continuously incurred even when business isn't operating, like salaries and utilities called?
What are costs continuously incurred even when business isn't operating, like salaries and utilities called?
Continuing Expenses
What is physical harm to a business's property due to perils like fire or natural disaster called?
What is physical harm to a business's property due to perils like fire or natural disaster called?
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What is an order from a governing body preventing access to a property, often due to risk or repair called?
What is an order from a governing body preventing access to a property, often due to risk or repair called?
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What is gross profit minus all operating expenses, representing a company's true income called?
What is gross profit minus all operating expenses, representing a company's true income called?
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What is revenue minus the cost of goods sold?
What is revenue minus the cost of goods sold?
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What are ongoing costs that remain consistent, regardless of business activity called?
What are ongoing costs that remain consistent, regardless of business activity called?
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What are costs that fluctuate with production, such as raw materials called?
What are costs that fluctuate with production, such as raw materials called?
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What is the name of the insurance that helps cover extra costs, like alternative facilities or specialized services, to maintain operations during disruptions?
What is the name of the insurance that helps cover extra costs, like alternative facilities or specialized services, to maintain operations during disruptions?
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What is the process called that addresses the careful selection of those businesses that meet the insurance company's risk tolerance?
What is the process called that addresses the careful selection of those businesses that meet the insurance company's risk tolerance?
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What is the name of the basis of coverage calculation that utilizes the actual financial loss sustained?
What is the name of the basis of coverage calculation that utilizes the actual financial loss sustained?
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What is the term that refers to the length of time business interruption insurance coverage applies?
What is the term that refers to the length of time business interruption insurance coverage applies?
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What is the term that refers to a limit that may apply to coverage for losses relating to media and data?
What is the term that refers to a limit that may apply to coverage for losses relating to media and data?
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What is the term that refers to the total business income subtracting costs directly related to operations?
What is the term that refers to the total business income subtracting costs directly related to operations?
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What is the term that refers to expenses necessary for essential operations even during an interruption?
What is the term that refers to expenses necessary for essential operations even during an interruption?
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What type of interruption refers to an interruption in business due to prevention of access or movement by local authorities?
What type of interruption refers to an interruption in business due to prevention of access or movement by local authorities?
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What is the evaluation of past financial records to project future income for a business in case of an interruption called?
What is the evaluation of past financial records to project future income for a business in case of an interruption called?
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What term refers to businesses that have revenue fluctuations throughout the year, requiring special claim consideration?
What term refers to businesses that have revenue fluctuations throughout the year, requiring special claim consideration?
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What are expenses that are not directly required to keep the business operational if it were to cease operations?
What are expenses that are not directly required to keep the business operational if it were to cease operations?
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What is a skill that insurance brokers require to be proficient in evaluating business interruption claims?
What is a skill that insurance brokers require to be proficient in evaluating business interruption claims?
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What type of insurance protects businesses from the risk of future income loss due to interruptions?
What type of insurance protects businesses from the risk of future income loss due to interruptions?
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What are the two key characteristics that brokers need to consider when recommending business interruption insurance?
What are the two key characteristics that brokers need to consider when recommending business interruption insurance?
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What are the two factors that might affect the determination of Actual Loss Sustained?
What are the two factors that might affect the determination of Actual Loss Sustained?
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Study Notes
Business Interruption Insurance (BI)
- BI protects businesses from income loss due to disruptions like property damage or utility failures.
- It covers the reduction in earnings during an interruption in operations.
- Costs like salaries and utilities are continuously incurred even if the business isn't operating.
- Property damage due to perils like fire or natural disasters are covered.
- Civil authority orders preventing access to a property are also covered.
- Gross profit minus operating expenses is a measure of a company's true income.
- Revenue minus cost of goods sold is another way to measure profitability.
- Fixed expenses are consistent, regardless of business activity (e.g., rent).
- Variable expenses fluctuate with production (e.g., raw materials).
- BI helps cover extra costs during a disruption, like alternative facilities or specialized services.
- Coverage duration is usually up to the time it takes to repair the damage.
- BI coverage has limits for media and data loss (typically up to 30 days).
- It covers total business income minus related operating costs.
- Necessary expenses even during interruption are covered.
- Interruption due to authorities and preventing access is covered.
- Businesses with fluctuating income throughout the year may have special considerations.
- Costs not directly required for daily operations are covered.
- Brokers don't need in-depth accounting knowledge to sell BI policies.
- Ancillary causes like strikes or lockouts are covered.
- Business interruption insurance typically has a 12-month maximum duration.
- Premium adjustment clause for certain coverage situations can vary.
Determining Business Interruption Loss
- Insurers consider what steps a business can take to prevent delays in resuming operations.
- Payroll, depreciation of stocks, and bad debts are considered.
- Estimated rental value of unoccupied portions of a building is a factor.
- Fair rental value of occupied portions is another key aspect.
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Description
This quiz explores the key concepts of Business Interruption Insurance (BI), including its purpose and coverage. It covers how BI protects businesses from income loss during disruptions and the different types of covered expenses. Test your knowledge of BI and its benefits for maintaining operations during challenging times.
