Understanding Extra Expense Insurance for Business Continuity

1. C40 – Business Interruption Insurance Study 7 – Extra Expense Insurance

2. Study 7 – Extra Expense Insurance • Explain why some businesses need extra expense insurance • Define the terms shown in the Definitions section • Distinguish each clause in an Extra Expense form • Comment briefly on the rating of the Extra Expense form • Describe how an amount of insurance should be chosen under an Extra Expense form • Describe how losses are settled under an Extra Expense form

3. Introduction

4. The Need for Extra Expense Insurance • Some businesses must avoid shutdown • Alternatives should be arranged • Steps to resume operations elsewhere • Expenses may exceed income • Many classes of risk have this need • Not four forms but two

5. Extra Expense (Named Perils) (IBC Form 4110A)

6. Definitions • The business of the insured. • Specified in the Declarations page.

7. Definitions • Direct physical loss of or damage to property. • At the insured premises. • From a Peril insured.

8. Definitions • Means the Declarations Page applicable to this form.

9. Definitions • The excess of the total cost during the indemnity period for the purpose of continuing the insured’s business over and above the total cost that would normally have been incurred.

10. Definitions The period beginning with the occurrence of the “Damage” and ending not later than such length of time, not exceeding 12 calendar months.

11. Definitions Means 30 consecutive days.

12. Definitions The condition which would have existed had no loss occurred.

13. Definitions The entire area within the property lines and areas under adjoining sidewalks and driveways. At the location described on the Declarations Page.

14. Indemnity Agreement • In the event that the “Business” shall be interrupted as a direct result of “Damage”, the Insurer shall pay to the Insured the necessary “Extra Expenses” incurred by the Insured during the “Indemnity Period” in order to continue as nearly as practicable the normal conduct of the “Business”, in accordance with the terms and conditions of this Form.

17. Perils Insured

18. Exclusions – First Group

19. Exclusions – Second Group

20. Clauses • Interruption by Civil Authority • Permission • Breach of Conditions • Reinstatement • Subrogation • Property Protection Systems

21. Extra Expense (Broad Form)(IBC Form 4110B)

22. Named Perils Provides coverage on losses incurred from hazards or events named on the policy

23. Exclusions – First Group

24. Exclusions – Second Group – Part I

25. Exclusions – Second Group – Part II

26. Rating

27. Choosing an Amount of Insurance

28. Loss Settlement

29. The End……………… • Questions????????????????? • Discussion>>>>>>>>>>>>>>>>