Question

An insured owns and operates a commercial business. He has included a business income coverage form with his commercial package policy. When the insured's business is severely damaged by fire, the business income coverage will pay for:____________.

Answer 1

lost income.

Step-by-step explanation:

A business income coverage is an insurance policy that covers lost income in case of a temporary halt of the business's normal operations. This temporary halt must result from some type of damage to the business's property or facilities, e.g. damages caused by flooding, fire, etc.

This policy covers lost net income only, it doesn't cover operating expense (no policy covers total revenue).

Answer 2

Net income plus continuing expenses of the business

Step-by-step explanation:

Based on the scenario being described within the question it can be said that the coverage will pay for Net income plus continuing expenses of the business. This is because a Business Income Coverage is a type of insurance that covers loss of income due to damages causing the business to slow or suspend operations. Such as in the unlikely case of a fire breaking out in the business.