CAIB 2 - Chapter 7 - Flashcards

Business Interruption Insurance

Income Loss

Continuing Expenses

<p>Property Damage</p> Signup and view all the answers

<p>Civil Authority Order</p> Signup and view all the answers

<p>Net Profit</p> Signup and view all the answers

<p>Gross Profit</p> Signup and view all the answers

<p>Fixed Expenses</p> Signup and view all the answers

<p>Variable Expenses</p> Signup and view all the answers

<p>Extra Expense Insurance</p> Signup and view all the answers

<p>Due Diligence and Dispatch</p> Signup and view all the answers

<p>&quot;Actual Loss Sustained&quot; Basis</p> Signup and view all the answers

<p>Coverage Duration</p> Signup and view all the answers

<p>Media Limitation</p> Signup and view all the answers

<p>Gross Earnings</p> Signup and view all the answers

<p>Continuing Expenses</p> Signup and view all the answers

<p>Interruption by Civil Authority</p> Signup and view all the answers

<p>Pre-Loss Analysis</p> Signup and view all the answers

<p>Seasonal Businesses</p> Signup and view all the answers

<p>Non-Continuing Expenses</p> Signup and view all the answers

<p>Accounting Expertise</p> Signup and view all the answers

<p>Business Interruption Insurance</p> Signup and view all the answers

<p>Gross Earnings Form/Profits and Business Interruption Forms</p> Signup and view all the answers

<p>The time it takes to resume operations after a disruption (A), The insured's ability to negotiate favorable contracts with suppliers (D)</p> Signup and view all the answers

The reduction in earnings a business experiences due to an interruption in operations.

Costs continuously incurred even when business isn't operating, like salaries and utilities.

Physical harm to a business's property due to perils like fire or natural disaster.

An order from a governing body preventing access to a property, often due to risk or repair.

Gross profit minus all operating expenses, representing a company's true income.

Revenue minus the cost of goods sold. A good starting point in evaluating profit potential.

Ongoing costs that remain consistent, regardless of business activity (e.g., rent).

Costs that fluctuate with production, such as raw materials.

Insurance that protects businesses from income loss due to disruptions, like property damage or utility failures.

It helps cover extra costs, like alternative facilities or specialized services, to maintain operations during a disruption.

The time it reasonably takes an insured business to restore operations following a loss, when performed with good judgement and efficiency.

The length of time BI coverage applies, generally up to the time needed to repair damage.

Business Interruption insurance coverage limits for media and data loss, usually a maximum of 30 days.

Total business income, subtracting costs directly related to operations.

Expenses necessary for essential operations even during an interruption.

Business interruption due to prevention access or movement by local authorities.

Evaluating prior financial data to assess potential income loss on a business interruption claim.

Companies with income varying throughout the year; special claim considerations may apply.

Costs not directly needed for operations if business doesn't run.

Clients don't want to purchase Business Interruption Insurance to fund or pay limited expenses.

Classifying businesses as semi-variable, and variable to better understand and estimate costs due to regulatory authorities.

Deals with continuous expenses.

Businesses would purchase extra expenses.

Expense payment is made in the event of rent or rental value endorsement.

Identify 2 Factors that might affect the determination of the actual loss sustained.

What reasons can be used to adjust payroll on a limited basis?

Provisions contained in the premium adjustment clause.

The amount of insurance is available is based on the time needed to resume normal operations referred to as a RESTORATION PERIOD.

Estimated rental value of unoccupied portions.

Fair rental value of the portions of the building occupied by the insured.

The amount of insurance is based on the insured's best judgement and efficiency.

The period of time needed to perform restoration is the restoration period.

It also takes into account the potential for additional disruptions.

As a result the insured may decide to reduce premium payable by deleting ordinary payroll.

The insured may decide to reduce cost to recruit & retrain new employees within weeks of the interruption.

50% Co clause insured is entitled to 25% max refund.

When coverage is on 80% Co Ins Clause refund is 50%

That the insured do whatever they can do to prevent delays in reinstating the property.

Payroll, depreciation of stock or bad debts.

Provisions can be made to insure ordinary payroll.