Question

XYZ Computer's production building for circuit boards is struck by lightning, which results in a fire that burns down the entire facility. XYZ Computer cannot continue the production of computers until the facility is rebuilt. Which insurance coverage might indemnify XYZ Computer for lost revenue until a new facility is built?

A. Business Interruption
B. Extra Expense
C. Builders Risk
D. Leasehold Interest

Answer 1

Business Interruption insurance would cover lost revenue for XYZ Computer after their production facility was damaged by lightning and subsequently burned down.

Step-by-step explanation:

The insurance coverage that might indemnify XYZ Computer for lost revenue until a new facility is built is Business Interruption insurance. This type of insurance compensates for lost income that a business suffers after a disaster-related closing of the business facility or due to the rebuilding process. Since factory damage, such as being struck by lightning and subsequent fires, ultimately causes the firm to be unable to supply products and generate revenue, a shift in the supply curve to the left occurs, representing production difficulties.