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income, and terminated operations since such problems are common with catastrophicevents. As a result, business interruption insurance is essential.1. Business Interruption InsuranceBusiness interruption insurance, also known as business income insurance, covers thebusiness’ loss of income after a catastrophic event while the business facility is closedor in the process of being rebuilt. While property insurance only covers physicaldamage to the business, business interruption insurance covers profits the businesswould have earned during the down period.There are many aspects to business interruption insurance coverage that businessesshould be aware of in order to help mitigate the risk of having inadequate or nocoverage in the event of a catastrophic loss.• Business interruption losses are calculated either by the “net incomemethod,” which starts with net income without the loss plus actualcontinuing expenses minus any earnings recognized from continuedoperations, or the “gross earnings method,” which consists of net lostsales less non-continuing expenses.• Generally accepted accounting principles and insurance loss accountingare not always the same for business interruption values.• Even though replacement costs may exceed the cost to repair damagedequipment, replacing damaged equipment might be more cost effective.For example, replacing equipment in order to restart business operationsMarch 5, 2015 11 @ 3-5-2015 ALFA International6427256.3/SP/00009/0099/011215