Property and Casualty Insurance Practice Exam

What is the limit for business income for dependent properties coverage?

1. Up to $10,000

2. Up to $5,000

3. Up to $15,000

4. No limit specified

The correct answer is: Up to $5,000

Dependent properties coverage is an important aspect of business income insurance, as it addresses income loss related to disruptions at properties that a business depends on for its operations. These dependent properties might include suppliers or customers whose operations, if interrupted, could affect the insured business's ability to generate income. The correct limit for business income coverage related to dependent properties is set at $5,000. This means that if a business suffers a loss of income due to an interruption at a dependent property—like a supplier not delivering materials due to fire or another covered peril—the insurer will compensate the business up to this specified limit. In the context of this question, the other choices represent amounts that exceed or fall short of the standard coverage offered for dependent properties, which is why understanding the correct limit is crucial for accurate coverage selection and risk management in business insurance.