Question

Diana owns a manufacturing company. One evening, a windstorm blows a tree through the side of her building, leaving a hole in the wall and damaging one of her production machines. Diana temporarily fixes the hole with some plywood, but will have to rent a new production machine until hers is repaired. Which coverage in her commercial property policy could indemnify Diana for the cost of the machine rental?

A. Profit & Loss Form
B. Rental Equipment Coverage
C. Extra Expense Coverage
D. Operating Expense Coverage

Answer 1

The correct coverage in Diana's commercial property policy for the cost of renting a new production machine due to windstorm damage is Extra Expense Coverage (C). This coverage helps businesses with additional costs resulting from unexpected events that disrupt normal operations.

Step-by-step explanation:

Diana owns a manufacturing company and has encountered damage to her property and equipment due to a windstorm. The coverage in her commercial property policy that could indemnify her for the cost of machine rental while hers is being repaired is Extra Expense Coverage (C).

Extra Expense Coverage is designed to cover expenses above the usual cost of doing business due to an insurable event. This can include the rental cost of equipment, temporary relocation expenses, and expedited shipping costs for replacement parts or equipment.

In Diana's case, since the windstorm damaged her production machine and she needs to rent another one to continue operations, the Extra Expense Coverage would be the appropriate part of her policy for this situation.