USE AND OCCUPANCY INSURANCE

enterprise falling into one of the present day major
activities. Special forms may be obtained to meet
special or unusual conditions.
It must always be borne in mind that a Use and
Occupancy insurance contract will not provide during
a period of business suspension, any more than the
amount equal to the “Actual Loss Sustained.” To
illustrate: An enterprise finds conditions very poor
and considers closing down for an extended period.
They learn that during this shut-down period their continuing
 overhead expense would probably be $500 per
day. They discover that by operating their plant they
could earn $300 of this indispensable overhead expense,
thereby reducing their loss to $200 per day. Such a
risk, insured under a Use and Occupancy insurance
policy would be entitled to collect only $300 per day
during a total suspension, thereby placing the policyholder
 in exactly the same position as he would have
been had there been no interruption.

The computation of the amount of Use and Occupancy
 insurance necessary to protect fully prospective
business earnings is a matter for careful consideration.
Just as it is necessary to ascertain the value of a building
before it can be properly insured under a fire insurance
contract, so too is it necessary to analyze the earnings
of a business before they can properly be covered under
a Use and Occupancy insurance contract. It would
be difficult to present a comprehensive and detailed
table for analyzing all types of earnings because of the
various and intricate accounting practices of modern
business. Nevertheless, after considerable research into
the methods employed by representative major industries,
 the “America Fore” group of insurance companies
has prepared a “Use and Occupancy Insurance Chart
showing in flow line the proper procedure for determining
the amount of insurance necessary for complete coverage
under current forms.” A reproduction of this chart,
properly filled in, is inserted in this booklet and is
accompanied by a detailed explanation.

Too much stress cannot be laid on the importance
of selecting the form of Use and Occupancy insurance
contract which offers the most complete coverage for
the type of business earnings under consideration.
Just as some earnings are constant, or fluctuate during
definite periods usual to certain classes of business, so

Actual Loss
Sustained

How to
Compute the
Amount of
Insurance

Selection
of an
Appropriate
Form