Question 42

Coverage for Loss of Income Requires Specific Endorsement

To be covered for loss of income due to an electrical power sub-station outage under a commercial package policy (CPP), the insured must have a CPP with the utility services - time element endorsement.

A) A CPP with the utility services - time element endorsement

This option is correct as it specifically provides coverage for loss of income caused by disruptions in utility services, such as power outages. The time element endorsement ensures that the insured is protected against income loss during the period of the outage.

B) An unendorsed CPP

An unendorsed CPP does not include any additional coverage options. Without specific endorsements, such as the utility services - time element endorsement, the policy would not cover loss of income due to a power outage, thus making this option incorrect.

C) A CPP with the utility services - direct damage coverage endorsement

While this endorsement provides coverage for direct damage to property caused by utility service interruptions, it does not cover loss of income. Therefore, this option is incorrect for the context of the question, which specifically addresses income loss.

D) A CPP with a protective safeguards endorsement

This endorsement is designed to cover losses related to protective measures in place, but it does not provide coverage for income loss resulting from utility outages. Thus, this option does not meet the requirement for coverage mentioned in the question.

Conclusion

The requirement for coverage of loss of income due to a power outage is explicitly met by having a CPP with the utility services - time element endorsement, making option A the only correct choice. All other options fail to provide the necessary coverage for income loss, either lacking specific endorsements or addressing different aspects of insurance coverage.