What does Business Income coverage include during the period of restoration?

Business Income coverage is designed to provide financial support during a period when a business is unable to operate due to a covered loss, such as property damage from fire or natural disaster. During the period of restoration, which is the time it takes to repair or rebuild the damaged property, Business Income coverage is particularly focused on the financial aspects that a business still incurs despite its inability to generate income.

Continuing operating expenses, including payroll, are a crucial element of Business Income coverage. This ensures that a business can continue to meet its essential financial obligations despite temporary disruptions. By covering these expenses, the insurance helps to retain employees and keep the business afloat, facilitating a smoother transition back to normal operations once repairs are completed.

Other options like depreciation of assets, loss of use of equipment, and replacement costs for damaged property do not fall under Business Income coverage. Depreciation relates to how an asset’s value decreases over time and isn't a direct expense that affects immediate cash flow. Loss of use of equipment, while impactful, is typically not covered as a separate expense under business income; rather, the focus is on maintaining operation amidst the loss. Finally, replacement costs pertain more to property coverage rather than business income, as they relate to the physical restoration of the property