An insured has had a partial business income loss and we are uncertain what to expect of the loss adjustment with the seventy-two hour time deductible now in our contract. The coverage is written with a monthly limit of $50,000 for the first month. As the loss is partial, is it the amount of actual loss for the first three days that is deducted, or is the deductible amount apportioned for the month? Furthermore, since the loss occurred on a Friday night and the insured does not operate on Saturday and Sunday, when does the seventy-two hour deductible begin? Is it seventy-two hours of normal operation that is deducted, or is our insured just lucky because the firm will really experience only the effect of a one-day deductible on this loss? Can you clarify this?

Dominican Republic Subscriber

According to the terms of the Insurance Services Office form for business income coverage (CP 00 30 06 95) recovery is keyed to a defined "period of restoration." For business income (not extra expense) that definition says the period does not begin until seventy-two hours "after the time of direct physical loss or damage." Thus, whether partial closure or complete shutdown occurs, there is no recovery of any business income loss during the first seventy-two hours. If there is no loss of business income during the period, or a reduced loss occurs because the business is normally closed during all or part of the time of the "period of restoration," the insured is lucky.