Loss of Business Income & Extra Expense or BI & EE

Business owners policies most often offer loss of business income (previously termed business interruption) on an ‘Actual Loss Sustained’ basis (ALS) subject to the terms, conditions, and exclusions of the policy.  Generally the coverage pays for the continuing operating expenses and net profits before taxes due to a loss caused by a covered peril (read policy form).  This coverage is usually granted for a period of one year.  On the other hand, the commercial package policy requires a specific monetary limit scheduled and a time period or term listed such as a period of three months.  Coverage is determined by the type of form selected such as basic, broad, and special for both the BOP as well as the CPP.  

Extra Expense provides for payment due to a covered loss to help mitigate the claim such as with the loss of business income.  This may include the rental of a temporary location and the cost to transfer the contents to the location to help resume operations quicker than if no measures were taken.  It may also include the payment for temporary help to expedite business operations.

 By William F. Schaake, CIC, CRM © 2011-2012 All rights reserved