RMIN 5530 Test 1

Expected Net Income - Actual Net Income

the reduction to a business's income when operations are interrupted by damage to property caused by a covered peril

expenses, in addition to normal expenses, that an organization incurs to mitigate the effects of a business interruption; are only payed because the loss occurred (ex: rent on a new, temporary location)

expenses that must be payed even after a loss has occurred (ex:property taxes)

expenses that do not have to be paid after a loss occurs (ex: minor employee salaries)

• 1. Damage to property at the organization's own premises
• 2. Damage to property away from the organization's own premises

• Loss from:
• 1. The orgo's own property off premises
• 2. Dependent property exposures
• 3. Interruption of utility services
• 4.Acts of civil authorities
• 5. Adverse weather

the possibility that an organizaion will incur BI and/or extra expense losses bc of damage to property at the premises of a firm on which the orgo depends; (exs: suppliers, key buyers, leader properties)

• 1. When do we expect business income to be reduced?
• 2. How long do we expect business income to be reduced?

• Time required to:
• 1. Replace damaged property
• 2. Restore normal rate of income

NOT EML; the sum of the insured's estimated net income and operation expenses for the 12 months following policy inception, minus only those expenses listed in the form (continuing expenses, not extra)

• 1. Non-continuing expenses
• 2. Time required to restore property
• 3. Peak seasons
• 4. Extended business income loss
• 5. Changes in expenses/revenues during restoration period
• 6. Extra expenses
• 7. Anything else (e.g. potential errors)

• Calculates insurance limits necessary to comply with CI condition if business income insurance
• Reports BI values to insurers
• Assists underwriters in accurately evaluating BI exposure

50, 60, 70, 80, 90, 100, and 125%

increases, decrease

• The higher of:
• EML
• Amount needed to satisfy CI requirement (CI%*CI basis)

EML/ CI basis

• 1. BIC w/o extra expense
• 2. BIC with extra expenses (3 options: 1. with rental value, 2. other than rental value, 3. rental value only)
• 3. Extra expense coverage form

• Actual loss of income sustained
• Due to the necessary suspension of your operations
• During the period of restoration
• Caused by direct physical loss of or damage to property at the described premises
• Caused by a covered loss

• 1. those incurred to avoid or minimize the suspension of business and to continue operations (at or away from the premises)
• 2. those incurred to minimise the suspension of business if operations cannot be continued
• 3. those made to expedite repairs

think of this as a time deductible; begins 72 hours after loss for insurance purposes and ends when property should be replaced or when business is resumed at a new permanent location

• 1. loss of revenue from damaged stock
• 2. time to reproduce/ manufacture damaged stock