Texas General Lines — Property and CasualtyCommercial LinesHard
A business owner has a Business Income coverage form with an Extended Business Income period of 60 days. After a covered fire, it takes 150 days to repair the property and resume operations. Once operations resume, it takes an additional 90 days for the business to return to its pre-loss income level. For how many days will the business be able to collect Extended Business Income?
- A60 days
- B90 days
- C150 days
- D30 days
Show answer & explanationAnswer & explanation
Correct answer: A. 60 days
Extended Business Income coverage begins once the property is repaired and operations resume. It pays for the loss of business income during the specified period until the business returns to its pre-loss income level, up to the policy's maximum extended period. In this case, even though it took 90 days to return to pre-loss levels, the policy's maximum extended period is 60 days. Therefore, the business will collect for 60 days.
Why the other options are wrong
- B. This is the actual time it took to recover, but it exceeds the policy's contractual limit for Extended Business Income.
- C. This represents the total time to repair, not the extended business income period which begins after repairs are complete.
- D. This is incorrect; the extended period is 60 days, not 30.
Extended Business Income
Coverage that pays for the loss of business income sustained after the business resumes operations, until income returns to pre-loss levels, up to a specified maximum period.
- Starts after direct business income period ends (operations resume)
- Pays until income returns to normal or max period expires
- Commonly 30, 60, or 90 days, can be endorsed for longer
Memory trick: Extended Income: After repair, it's a race against the clock.