A practical guide to business income worksheets: continuing expenses, the period of restoration, extended period of indemnity and extra expense.
After a covered property loss, business income coverage replaces the net income the business would have earned plus the expenses that continue while it is closed. Extra expense pays the additional costs of reducing the shutdown — a temporary location, rush shipping, overtime.
Business income is revenue minus the expenses that stop during a shutdown (cost of goods sold, raw materials, some utilities). Everything else — rent, salaried payroll, loan payments, insurance — continues and must be covered. Project it forward for the coming year, not last year.
The period of restoration is how long it would take to rebuild and reopen: design, permits, contractors, equipment lead times. Owners routinely underestimate it. Many businesses also need months to win back customers after reopening, which the extended period of indemnity covers.
Business income forms often carry a coinsurance percentage applied to a full year of business income. If the limit falls short, the claim is penalized. Monthly limits of indemnity or agreed value options avoid that test.