1. The building where Alpha Mortgage Company's office was located received minor smoke damage, forcing the company to relocate its operations for one month. Assuming standard BIC coverage and the following hypothetical conditions, what amount of benefits could the company expect to receive? Preloss Financial Information Average monthly revenues $220,000 Average monthly payroll $100,000 Monthly heat, electricity, water $25,000 Monthly rent for leased office $25,000 Monthly interest expense $10,000 $5,000 Monthly marketing expense Monthly other expenses $5,000 Postloss Financial Information for One Month Revenues $170,000 Payroll $100,000 $30,000 Utilities Rent on leased office $0 Rent for temporary space $50,000 Interest expense $0 Marketing expense $6,000 Other expenses $12,000 Answer: According to Preloss Financial Information; Net Income = According to Postloss Financial Information; Net Loss = The total loss equals _, the sum of income not received _that would have been expected without a loss, plus the actual lost income _incurred. The amount of benefit that the company would expect to revive is 2. Steinman also bought a BIC with a limit of $250,000 and a 50 percent coinsurance clause. No other endorsements are used. A limited income statement for last year is shown below. Revenues $2,000,000 Less: Cost of goods sold $800,000 $200,000 Utilities Payroll $400,000 Other expenses $300,000 $1,700,000 Profit $300,000 a. How much in expenses does Steinman expect to be noncontinuing in the event of a shutdown? Explain. Answer: The limit of insurance ought to equal the expected lost profits plus continuing expenses. Assuming no peak period, with a limit of and a coinsurance clause, Steinman is indicating that on an annualized basis, it expects to lose its - in profits plus enough expenses to equal (the limit of - for a whole year instead of half a year). The expected continuing expenses, therefore, equals _on an annualized basis, or for the six month expected shut-down period. b. What is the longest shutdown period Steinman would expect following a loss? Answer: Steinman expects no more than a _-month shutdown, evidenced by the __coinsurance clause. Again, the assumption is that business is stable over the year. c. If a three-month closing occurred following the roof collapsing due to the weight of snow, what do you think would be the loss? Explain. Answer: For a three-month shut-down, if Steinman's estimates are correct, we would expect a loss of which is half of what he expected for a six-month shut-down. 1. The building where Alpha Mortgage Company's office was located received minor smoke damage, forcing the company to relocate its operations for one month. Assuming standard BIC coverage and the following hypothetical conditions, what amount of benefits could the company expect to receive? Preloss Financial Information Average monthly revenues $220,000 Average monthly payroll $100,000 Monthly heat, electricity, water $25,000 Monthly rent for leased office $25,000 Monthly interest expense $10,000 $5,000 Monthly marketing expense Monthly other expenses $5,000 Postloss Financial Information for One Month Revenues $170,000 Payroll $100,000 $30,000 Utilities Rent on leased office $0 Rent for temporary space $50,000 Interest expense $0 Marketing expense $6,000 Other expenses $12,000 Answer: According to Preloss Financial Information; Net Income = According to Postloss Financial Information; Net Loss = The total loss equals _, the sum of income not received _that would have been expected without a loss, plus the actual lost income _incurred. The amount of benefit that the company would expect to revive is 2. Steinman also bought a BIC with a limit of $250,000 and a 50 percent coinsurance clause. No other endorsements are used. A limited income statement for last year is shown below. Revenues $2,000,000 Less: Cost of goods sold $800,000 $200,000 Utilities Payroll $400,000 Other expenses $300,000 $1,700,000 Profit $300,000 a. How much in expenses does Steinman expect to be noncontinuing in the event of a shutdown? Explain. Answer: The limit of insurance ought to equal the expected lost profits plus continuing expenses. Assuming no peak period, with a limit of and a coinsurance clause, Steinman is indicating that on an annualized basis, it expects to lose its - in profits plus enough expenses to equal (the limit of - for a whole year instead of half a year). The expected continuing expenses, therefore, equals _on an annualized basis, or for the six month expected shut-down period. b. What is the longest shutdown period Steinman would expect following a loss? Answer: Steinman expects no more than a _-month shutdown, evidenced by the __coinsurance clause. Again, the assumption is that business is stable over the year. c. If a three-month closing occurred following the roof collapsing due to the weight of snow, what do you think would be the loss? Explain. Answer: For a three-month shut-down, if Steinman's estimates are correct, we would expect a loss of which is half of what he expected for a six-month shut-down