Business income losses can be measured in terms of net income. Toy Company recently experienced
$70,000 in expenses and $100,000 in revenue. What is Toy Company's net income?
a. $30,000
b. $70,000
c. $100,000
d. $170,000 - Answer-a. $30,000
During a business interruption, some of the organization's expenses, called continuing expenses, will
continue, and other expenses, called non-continuing expenses, will not continue. Which one of the
following is an example of a continuing expense?
a. Overtime wages to employees
b. Cost to rent temporary office space
c. Payroll of key employees
d. Cost of overnight air shipment of needed repair parts - Answer-c. Payroll of key employees
Which one of the following most fully describes what must occur in order for BI insurance to apply?
, a. An interruption of operations causes by property damage from a covered peril to property at
locations or situations described in the policy resulting in a loss of business income and/or extra
expense.
b. An interruption of operations caused by property damage from a covered peril to property at
locations or situations described in the policy.
c. Property damage from a covered peril to property at locations or situations described in the policy
resulting in a loss of business income and/or extra expense.
d. An interruption of operations caused by property damage resulting in a loss of business income
and/or extra expense. - Answer-a. An interruption of operations causes by property damage from a
covered peril to property at locations or situations described in the policy resulting in a loss of business
income and/or extra expense.
Business income coverage is considered a time element coverage for which one of the following
reasons?
a. Loss frequency is dependent on the length of time needed to restore damaged property.
b. The average duration of losses is only a few weeks.
c. Loss severity is dependent on the length of time needed to restore damaged property.
d. Maximum length of coverage only lasts for a specific amount of time. - Answer-c. Loss severity is
dependent on the length of time needed to restore damaged property.
BI insurance covers which one of the following types of losses that could result from a fire?
a. The cost to replace destroyed inventory
b. The cost of fighting the fire
c. The extra expenses for renting a temporary office
d. The cost of repairing a building - Answer-c. The extra expenses for renting a temporary office
For BI coverage, the period of restoration is the period of time that begins 72 hours after the:
a. Claims representative has completed a claim report.
b. Extent of loss has been estimated by the insured.
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