Business Interruption Claim Study 8

Question 1

Insurance against loss of profits and continuing fixed expenses resulting from an insured peril that prevents a business from continuing its normal operations.

Answer 1

Business Interruption insurance

Question 2

The sum of the net profit plus the insurance standing charged (overhead)

Answer 2

gross profit

Question 3

In business interruption insurance expenses do not change in direct proportion to changes in sales ( for example, fixed and semi-fixed costs such as tax, rent, and insurance). It specifically excluded ordinary payroll, therefore ordinary payroll is not insured unless a specific extension of cover is selected to include it.

Answer 3

standing charges

Question 4

The duration of the length of time for which indemnity will be provided under the policy

Answer 4

Indemnity period

Question 5

Business interruption insurance that covers the insured’s reduction in gross earnings suffered as a result of a direct damage loss. Covers include profits, continuous expenses management payroll and ordinary payroll

Answer 5

gross earnings coverage