West Virginia Property and Casualty Licensing Practice Exam

If an insured's phone system is damaged and they are out of business for a few days, what endorsement is needed to cover the loss of business income?

1. Business interruption endorsement

2. Utility services - time element endorsement

3. Equipment breakdown endorsement

4. Loss of income endorsement

The correct answer is: Utility services - time element endorsement

The endorsement needed to cover the loss of business income when an insured's phone system is damaged is the utility services - time element endorsement. This endorsement specifically addresses disruptions in essential utility services, which can impact a business's operations and income. By including this endorsement, the insured can receive coverage for loss of income due to the failure of services provided by utility companies that are essential for business operations, such as telecommunications. In situations where the phone system goes down, the business may experience significant losses due to a halt in communication and customer interaction, leading to decreased revenue. The utility services - time element endorsement is designed to cover these types of interruptions that are caused by utility service disruptions, thus providing protection for lost income during the downtime. Other endorsements may cover different aspects: for example, the business interruption endorsement might focus on the overall interruption of business operations due to property damage rather than specifically addressing utility failures. The equipment breakdown endorsement relates to physical damage to equipment itself rather than the income loss connected to operational halts. Thus, the utility services - time element endorsement is crucial in providing the necessary coverage in this scenario.