Given the following case, estimate GSC'S maximum business income loss exposures and determine the limit of business income insurance based on the estimated maximum loss.

Green Supply Company Case Green Supply Company (GSC), a wholesale distributor of specialty home gardening equipment, is located in a suburb of Indianapolis, IN. in a one-story noncombustible building under a ten-year lease. The lease contains a rent abatement clause providing that if the building is damaged by more than 50 percent, GSC's obligation to pay rent will be suspended until the building is restored and able to be occupied by GSC. GSC sells to garden supply stores and hardware stores throughout Indiana and other adjacent states. GSC has exclusive distributorship for some of the products it sells. The exclusive products, which account for approximately 25 percent of GSC's annual sales, are manufactured by one firm in Cleveland, OH. In preparation for the renewal of GSC' property insurance, GSC's CFO, working with GSC's insurance producer, has completed an ISO business income worksheet of the same types as discussed in the textbook. The worksheet estimates of financial data for the policy year commencing October 1, 2016 are summarized in Table 1. Other key financial estimates for the coming policy year, not contained in the worksheet, are shown in Table 2. A reliable local contractor has estimated it would take five months to rebuild the entire building should the loss occur in the winter. Severe weather conditions could add as many as forty-five days to the period required for restoration. Another month would be needed to install trade fixtures and equipment, and an additional half month would be needed to restock merchandise and to staff the operation with trained employees. GSC's sales pattern by month is shown in Table 3. GSC's financial officer has calculated that $1,280,000 of payroll and other normal operating expenses would probably continue during a (worst case) shutdown. In addition, the financial officer estimates that $70,000 of extra expenses would be incurred during the shutdown and that $45,000 of income would be lost during the thirty days following the period of restoration before the business returned to its normal operating level. Due to the rent abatement clause in GSC's lease, the CFO did not include the rental expense for the six and one-half months. Table 1. Gardener's Supply Company: Summary of Worksheet Estimates Net Sales Other Earnings Total Revenues $18,000,000 60,000 18.060.000

Green Supply Company Case Green Supply Company (GSC), a wholesale distributor of specialty home gardening equipment, is located in a suburb of Indianapolis, IN. in a one-story noncombustible building under a ten-year lease. The lease contains a rent abstement clause providing that if the building is damaged by more than 50 percent, GSC's obligation to pay rent will be suspended until the building is restored and able to be occupied by GSC GSC sells to garden supply stores and hardware stores throughout Indiana and other adjacent states. GSC has exclusive distributorship for some of the products it sells. The exclusive products, which account for approximately 25 percent of GSC's annal sales, are manufactured by one firm in Cleveland, OH In preparation for the renewal of GSC' property insurance, GSC's CFO, working with GSC's insurance producer, has completed an ISO business income worksheet of the same types as discussed in the textbook. The worksheet estimates of financial data for the policy year commencing October 1, 2016 are summarized in Table 1. Other key financial estimates for the coming policy year, not contained in the worksheet, are shown in Table 2. A reliable local contractor has estimated it would take five months to rebuld the entire building should the loss occur in the winter, Severe weather conditions could add as many as forty-five days to the period required for restoration. Another month would be needed to install trade fixtures and equiprnent, and an additional half month would be needed to restock merchandise and to staff the operation with trained employees. GSCs sales pattern by month is shown in Table 3. GSCs financial otficer has calculated that $1.280.000 of payroll and other normal operating expenses would probably continue during a (worst case) shutdown. In addition, the financial officer estimates that $70,000 of extra expenses would be incurred during the shutdown and that $45,000 of income would be lost during the thirty days following the period of restoration before the business retumed to its normal operating level. Due to the rent abatement clause in GSC:s lease, the CFO did not include the rental expense for the six and one-half months. "Salaries and wages include fringe benett cost, payrou taxes, and workers compensation premiums