Question

Using the Earnings Approach, Business Interruptions have been insured mainly in a form called the:

A. Gross earnings form
B. Net profit form
C. Comprehensive earnings form
D. Operational earnings form

Answer 1

Business interruption insurance is commonly provided under a Gross Earnings Form, which helps businesses deal with income losses due to halted operations after a covered peril, preventing potential exit from the market.

Step-by-step explanation:

Using the Earnings Approach, business interruptions insurance has primarily been provided in a policy known as the Gross Earnings Form. This form of insurance is designed to protect businesses from the loss of income that could result if operations are halted due to a covered peril, like damage to the property or essential equipment. Such coverage is critical as it helps businesses cope with the loss of income during the time necessary to repair or replace the damaged property, allowing them to cover fixed costs and mitigate the risk of having to exit from the market due to sustained losses, as discussed in the Clear It Up feature.