An insured’s business is damaged by a fire, and temporarily shut down for repairs. As a result, the insured suffers loss of income. What type of loss is the loss of income?
Indirect or consequential
The type of loss suffered by the insured due to the shutdown of their business is known as Business Interruption Loss or Business Income Loss. Business Interruption insurance is designed to protect businesses against this type of loss. It compensates the insured for the actual loss of income suffered as a result of an interruption to their business operations caused by covered perils, such as fires, floods, or natural disasters. The insurance policy will generally cover expenses like rent, salaries, utilities, and other ongoing business expenses, as well as lost income during the shut-down period.
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