1. 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

2. 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

3. 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

4. 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

5. 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