Which statement best describes the use of business income coverage?

• A. It covers net income lost and continuing expenses when a business is interrupted.
• B. It covers the cost of repairing or replacing physical property.
• C. It covers employee injuries.
• D. It covers liabilities to customers.

Answer: (B)

Business income coverage is meant to keep a business financially afloat after an interruption caused by a covered loss. It pays for the net income the business would have earned during the restoration period and for continuing expenses necessary to resume operations, such as payroll and rent. This helps bridge the financial gap while normal operations are paused.

The cost to repair or replace physical property is handled by property coverage, not business income. So while BI protects earnings and ongoing expenses, property coverage takes care of repairing or replacing the building, equipment, or inventory that suffered damage. For example, if a fire halts a shop, BI would cover lost profits and ongoing expenses during downtime, while property coverage would pay to repair the building and replace damaged equipment.