AAMI Small Business Management Practice Test

Business interruption insurance covers

Lost income. Replacement of equipment. Legal costs. Inventory depreciation.

Correct Answer:

Lost income.

Explanation:

Business interruption insurance focuses on the money a business would have earned during a shutdown, plus certain expenses needed to continue or resume operations after a covered event. The essential idea is to restore earnings that are lost when operations stop, which is why the coverage is described as lost income. It does not cover replacement of equipment—which is handled by property or equipment coverage—nor does it cover legal costs, which come from liability or legal defense policies. It also doesn’t address inventory depreciation, which is an accounting/value issue rather than income protection.

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