Extended business revenue coverage would protect against loss of business revenue that continues for the 30-day period after the store has resumed operations and the restoration period has ended. Many policies only offer a 30-day extension. What if you're a hotel in Maine and your house catches fire in July and is ready to open in December? It has lost a year of business activity and may not receive its first guest until June. Business Income pays for lost income until the damaged property is repaired or the limit is exhausted. The property can be real or personal property and does not have to be the property of the named insured.
Marine coverage forms indicate that coverage is limited to covered property or to property that is not otherwise excluded on the coverage form. The suspension must be the result of a covered cause of loss. Expanded business income continues to pay after the end of the reinstatement period until revenues return to their pre-loss level. The suspension must be due to direct physical loss or property damage in the premises described in the Statements and for which a business income insurance limit is indicated in the Statements.
For some insured companies, they may recognize that 60 days of extended business income coverage is insufficient to cover anticipated losses due to delays. An extension of the compensation period can be used to give the company more time to recover from the suspension. However, the fact that an insured person miscalculates that the company could be operational in that period of time can be catastrophic, since the extended compensation period option cannot be used if the maximum compensation period option is selected. This type of coverage is active against the same causes of loss covered by the property policy of the insured company.
The loss of business revenue must be due to direct physical loss or damage to the described facilities caused by or as a result of any covered cause of loss. It involves examining traditional financial measurement tools, including profit and loss, income statements, and payroll records. The definition of an extended period of compensation refers to a company's income insurance policy, which covers the loss of revenue during a suspension of operations. However, business income coverage can be expanded to allow operations to increase again and resume normal levels.
The 72-hour delay in the start of the restoration period can be reduced or eliminated by approving CP 15 56, entitled “Changes in business revenues”, “Start of the restoration period”. If the company's ability to restore its revenues to pre-loss levels is harmed by external economic circumstances, the extension of coverage will not apply. The most important part of the process of adjusting for a company's loss of revenue is knowing what questions to ask. Protection under the coinsurance option for business income coverage, unlike the two previous methods, does not stop after a specified time after the filing of a claim.
