North Carolina Adjuster Practice Exam

Which type of insurance would cover Jill's loss of income due to her store being closed after a hurricane?

1. Commercial Property Insurance

2. Business Interruption Insurance

3. Workers' Compensation Insurance

4. Business Owner's Policy

The correct answer is: Business Interruption Insurance

Business Interruption Insurance is designed to cover the loss of income that a business suffers due to a covered event, such as a natural disaster like a hurricane. This type of insurance provides compensation for lost revenue that the business would have generated if it were not for the incident that caused the interruption in operations. It takes into account fixed costs that continue to accrue even when the business is not operational, such as rent, utilities, and payroll. In Jill's case, if her store is closed due to a hurricane, Business Interruption Insurance would step in to replace the income she is losing during the period of closure, enabling her to manage her ongoing expenses despite the temporary loss of revenue. Commercial Property Insurance primarily protects the physical assets of the business, such as buildings and inventory, but does not cover income loss directly. Workers' Compensation Insurance provides coverage for employee injuries that occur during employment, not for loss of business income. A Business Owner's Policy often combines Commercial Property Insurance and Business Interruption Insurance but may not explicitly cover all scenarios for income loss depending on the specifics of the policy. Thus, Business Interruption Insurance is the most fitting choice for the scenario described.