State Farm Insurance License Practice Exam

What would trigger the payment under a Business Income Policy?

1. General repair costs of the property

2. Suspension of operations due to property damage

3. Loss of customer data due to a cyber incident

4. Increased cost of materials after a disaster

The correct answer is: Suspension of operations due to property damage

The payment under a Business Income Policy is triggered by the suspension of operations due to property damage. This type of policy is specifically designed to cover the lost income that a business may suffer as a result of damaged property that leads to a halt in business activities. When a property is damaged, it may not be possible for the business to operate, resulting in a loss of revenue. The policy provides financial assistance during this downtime to help cover fixed expenses and lost income until operations can resume. Other options, while they relate to business operations or financial impacts, do not directly invoke the payment terms of a Business Income Policy. General repair costs are typically covered under property insurance rather than business income losses. Loss of customer data due to a cyber incident is generally covered under cyber liability insurance, not a business income policy. Increased costs of materials following a disaster pertain more to operational costs and might be addressed in other types of coverage rather than directly causing a loss of business income.