Questions often arise with respect to business income coverage, particularly with respect to the waiting period, what constitutes a business income loss, and how the additional coverages apply.

Practically everyone understands an insurance deductible and how it applies. Take for example a commercial property deductible. A building valued at $100,000 burns to the ground. Assuming it was adequately insured to value, with a $500 deductible, the insured would receive a loss payment of $99,500. The $500 deductible is retained by the carrier as the insured's portion of the loss. What seems to be confusing to many is a loss that involves not just property damage, but also a loss of business income and extra expense.

Business Income and Extra Expense is a Commercial Property coverage option. Business income insurance is also referred to as business interruption or time element coverage. The coverage protects the business income of the insured that would normally be generated if there were no physical damage or loss to property.