USE AND OCCUPANCY INSURANCE

USE AND OCCUPANCY INSURANCE

HEN fire visits a place of business engaged in the
WwW production or distribution of commodities, or
engaged in selling “Service” (such as Hotels,
Theatres, Laundries, and some Public Utilities), production
 and sales either diminish or stop entirely.
Consequently business earnings either diminish or stop
entirely. The straight fire insurance policy takes care
of the necessary repairs and replacements as respects
the damage to physical property, but it does not pay
those standing expenses which must be met whether a
business is operating or not. Nor does it provide for the
net profits which would have been earned had the fire
not interrupted. [ To insure a business against loss of
earnings by reason of interruption by fire, Use and Occupancy
 insurance was designed. It can be maintained
 at a moderate premium cost.

In its essence, a Use and Occupancy insurance
contract operates, during a period of business suspension,
 to provide the same net earnings that a business
would have enjoyed had no interruption occurred.
Specifically:

How Use and
Occupancy
Insurance
Operates

It pays the net profit which a business would have
earned. This means that that portion of Net
Profit which is prevented from being earned by a
suspension of operations is paid under the
insurance policy.

It pays those business charges and expenses which
continue during a period of business suspension.
This means that the salaries of officers and other
valuable employees, wages of labor, interest
on borrowed capital, taxes, and similar business
costs which must necessarily continue during a
suspension are paid under the insurance policy
and not out of the business reserves which usually
are needed for other purposes.

It also pays any extraordinary expenses necessary
to keep a business operating if possible after a fire,