Question

ABC Acoustics builds replica Neumann microphones using tube technology. When a fire takes out the only factory that manufactures these vintage tubes, ABC Acoustics must halt production until their supplier's factory comes back online. Which commercial property insurance coverage option could indemnify ABC Acoustics from lost income due to halted production?

a. Extra Expense
b. Contingent Business Interruption
c. Vintage Replacement
d. Electronic Data

Answer 1

A)Contingent Business Interruption coverage is the best fit for indemnifying ABC Acoustics for lost income due to halted production caused by a supplier's factory fire.

Step-by-step explanation:

When a fire destroys the factory producing vintage tubes needed by ABC Acoustics, halting their production, the most suitable commercial property insurance coverage option.

That could indemnify the company for lost income would likely be b. Contingent Business Interruption (CBI) coverage.This specific insurance is designed to protect businesses against losses that occur when a supplier faces a disruption that impacts the insured's business operations.

Unlike Extra Expense coverage, which covers additional costs to continue operations after a loss, or Vintage Replacement, which isn't a typical type of coverage and seems irrelevant in this context.

CBI directly addresses the income loss due to a supplier's inability to deliver necessary components. Electronic Data coverage, conversely, is concerned with losses involving digital data, not physical manufacturing components or production capabilities.