This week's question pertains to business insurance loss during a period of restoration. (Photo: Shutterstock)
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Editor's Note: We frequently receive questions around business interruption coverage. This week's question focuses on one critical element of business income loss policies: period of restoration.
Question: Regarding business interruption coverage, if an insured experiences the loss of income during the first three months of a loss, but then is able to match previous sales for the remaining time of restoration, can the first three months stand alone as a loss? If this period is added as part of the 'full time of restoration,' it will reduce the loss amount due to the sales average for the total time of restoration. The policy language specifies coverage "during the period of restoration."
— Connecticut Subscriber
Analysis: Insurance contract language is specific and binding on the insurer and the insured; it is a contractual agreement. As with most contracts, certain terms have express meanings that must be interpreted and understood as to their specific application under the policy. As such, the definitions section is of extreme importance when it comes to understanding how and if coverage applies in a given claim situation.
For example, if the "period of restoration" under the business income coverage form begins 72 hours after the time of the loss until either the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality, or the date when the insured resumes operations at a new permanent location, then the insured is entitled to payment for business lost during that time,
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