Question

A windstorm cuts the power supply of a wholesale butcher. To keep his inventory from spoiling, the butcher immediately runs to the store and rents generators to keep his freezers working. Which of the following statements is TRUE?

a. Business Interruption coverage will indemnify the butcher for the extra expense, even if renting the generators fails to keep the meat from spoiling.
b. Business Interruption coverage will indemnify the butcher for the cost of the rentals, but only if he succeeds in preserving his inventory.
c. Business Interruption coverage does not cover extra expenses, such as equipment rental.
d. Business Interruption coverage will indemnify the butcher for the cost of the rentals, but only if he had to close the store for more than 15 minutes while picking them up.

Answer 1

Business Interruption coverage will indemnify the butcher for the cost of the rentals, but only if he had to close the store for more than 15 minutes while picking them up.

Step-by-step explanation:

The correct answer is d. Business Interruption coverage will indemnify the butcher for the cost of the rentals, but only if he had to close the store for more than 15 minutes while picking them up.

Business Interruption coverage is designed to compensate a business for lost income and extra expenses incurred as a result of an insured event disrupting normal operations. In this case, the windstorm cutting the power supply qualifies as an insured event that caused the interruption in the butcher's business.

According to the statement, the coverage will indemnify the butcher for the cost of the rentals. However, it states that this is true only if the butcher had to close the store for more than 15 minutes while picking up the rentals.