2. Steinman 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 Utilities $200,000 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: coinsurance clause. Steinman expects no more than a _-month shutdown, evidenced by the Again, the assumption is that business is stable over the year. c. If a three-month closing occurred fo llowing 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