BUSINESS INCOME COVERAGE EXPENSE CHART Comparing pre-loss and post loss expense levels, post-levels expenses are likely to be : ITEM Payroll Services Performed by Others EXAMPLES Employees with no skills who can be replaced easily . Officers, executives, dept. managers, other important employees under contract. Includes salaries & wages, worker’s compensation, social security, retirement plan expenses, group insurance, etc. Insured’s purchase of appliance repairs, installations, entertainment groups, clothing alteration, etc. SPECIAL CONSIDERATIONS Probably continued for short interruptions; discontinued for extended interruption. Some may be retained at any cost because of contract. Some middle management employees may be discontinued for an extended interruption. Depends also on local labor market. “Family” payroll continuing for key positions or for nonproductive individuals, discontinuing for nonessential productive members. Probably discontinued for complete or extended interruption. Partial interruption may require continuing . Some may continue under contract. SAME X LESS MORE RERENCE 1,2,3,4 9 4,11 1,2,9,10

SPECIAL CONSIDERATIONS SAME LESS MORE REFERENCE ITEM EXAMPLES SPECIAL CONSIDERATIONS SAME LESS MORE REFERENCE Interest Taxes Insurance Communications Real estate mortgages Loans Property taxes Excise taxes based on inventory or sales. 1) Property 2) Liability Postage, telephone, telegraph Discontinued if loan paid off as direct result of occupancy. Might discontinue for total loss. New loans may be required against other properties. Continued in partial loss with little reduction in value; discontinued in total property destruction depending on tax assessment date. Continued if sales continue or if inventory remains. 1) Possibly discontinued for total loss; continued or partial loss. 2) Discontinued or reduce if premium based on gross receipts; continued if premium based on flat amount Continued in full for short shut down, possibly increased to facilitate resumption of business. Discontinued for extended shut down, resumed before business resumes. X 1,2,9,12 1,2,6 1,2,5,6 1,2,10,11 1,2,9,10

ITEM EXAMPLES SPECIAL CONSIDERATIONS SAME LESS MORE REFERENCE Utilities Maintenance Depreciation Shipping Lease or Rent Advertising Royalties, Franchise and License Fees Heat, light, power, water Janitorial, Custodial All property Postage, truck, package services, air freight Store locations, warehousing, computer or other equipment Periodicals, broadcast media, other Payments to an inventory , etc. to owners of franchise operations; to municipalities or professional organizations Minimal continuation for short shut down; discontinued for extended period. Some utilities require a minimum charge. Discontinued or minimal. Usually consider as continuing; undamaged property continues, destroyed property ceases. No way to predict damage. Continuing, probably at minimum, under delivery contracts. Reduced or discontinued with partial or total suspension. Normally continued; depends upon lease or rental agreement. Discontinued if based on sales. Consider company policy; contracts would continue; some might be increased to retain customers; others might discontinue entirely during shut down Continuing if flat fees. Discontinued if based on sale or production. X 1,2,9,10 1,2,8,9,10 1,2,9

ITEM EXAMPLES SPECIAL CONSIDERATIONS SAME LESS MORE REFERENCE Bad debts, Charge Card Discounts, Collection Professional Fees Travel Accounts receivable, NSF checks, banks charges Accounting or legal services Mileage, air fare, etc. Reduced or discontinued based on sales volume. Continued for retainers; reduced for non-retainers. Consider purpose; might Discontinue, continue, or increase. X 1,2,7,9 1,2,9,10 1,2,9

INDEX TO REFERENCES Profit & loss Statements and/or Income Tax Returns Cash Disbursements Journal and Cash Receipts Journal Bank Statements and Canceled Checks Payroll Tax Returns Sales Tax Returns Property Tax Returns, Bills, Assessments Bank Statements Leases Contracts Bills Insurance Policies/Rates Balance Sheet