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Business Income Coverage

Business Income Coverage

Definition

Commercial property insurance covering loss of income suffered by a business when damage to its premises by a covered cause of loss causes a slowdown or suspension of its operations. Coverage applies to loss suffered during the time required to repair or replace the damaged property. It may also be extended to apply to loss suffered after completion of repairs for a specified number of days. There are two Insurance Services Office, Inc. (ISO), business income coverage forms: the business income and extra expense coverage form (CP 00 30) and the business income coverage form without extra expense (CP 00 32). Business income coverage (BIC) is also referred to as business interruption coverage.
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Related Terms

Commercial Property Coverage Forms

Insurance Services Office, Inc. (ISO), commercial property insurance forms that define, limit, and explain what property or property interest is covered. An ISO commercial property policy consists of: one or more coverage forms, one or more causes of loss forms, the commercial property conditions form, the common policy conditions form, and the declarations. The most widely used ISO commercial property coverage forms are the building and personal property coverage form (CP 00 10) and the business income and extra expense coverage form (CP 00 30).

Commercial Property Policy

An insurance policy for businesses and other organizations that insures against damage to their buildings and contents due to a covered cause of loss, such as a fire. The policy may also cover loss of income or increase in expenses that results from the property damage (PD). Commercial property policies may be written on standard or nonstandard forms.

Extra Expense Coverage

Commercial property insurance that pays for additional costs in excess of normal operating expenses that an organization incurs to continue operations while its property is being repaired or replaced after having been damaged by a covered cause of loss. Extra expense coverage can be purchased in addition to or instead of business income coverage, depending on the needs of the organization. There are two Insurance Services Office, Inc. (ISO), commercial property forms that provide extra expense coverage: the business income and extra expense coverage form (CP 00 30) and the extra expense coverage form (CP 00 50).

First-Party Insurance

Insurance applying to the insured's own property or person.

Insurance Services Office Inc. (ISO)

An organization that collects statistical data, promulgates rating information, develops standard policy forms, and files information with state regulators on behalf of insurance companies that purchase its services.

Property Insurance

First-party insurance that indemnifies the owner or user of property for its loss, or the loss of its income-producing ability, when the loss or damage is caused by a covered peril, such as fire or explosion. In this sense, property insurance encompasses inland marine, boiler and machinery (BM), and crime insurance, as well as what was once known as fire insurance, now simply called property insurance: insurance on buildings and their contents.

Time Element Insurance

A property insurance term referring to coverage for loss resulting from the inability to put damaged property to its normal use. This type of coverage is called "time element" insurance because the amount of loss depends on how long it takes to repair or replace the damaged property. The best-known types of time element insurance are business interruption and extra expense coverage.

Dependent Properties Time Element Coverage

Time element property insurance that pays for the loss of income or increase in expenses resulting from damage from a covered cause of loss to the premises of another organization on which the insured depends, such as a key supplier or customer. The two types are dependent properties business income coverage and dependent properties extra expense coverage. Previously referred to as contingent time element coverage.

Time Element Loss

Loss resulting from inability to use a property. Examples are business interruption, extra expense, rental income, etc.

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