Simplified Earnings Form
What Does Simplified Earnings Form Mean?
A simplified earnings form, now called a Monthly Limit of Indemnity Form, is a policy that covers business interruptions caused by negative events, such as fire damage. It pays for losses that are incurred because business operations are involuntarily suspended or discontinued. The insured is paid an amount with a monthly limit while rebuilding their business.
Insuranceopedia Explains Simplified Earnings Form
Business interruption insurance differs from property insurance because it acknowledges not just the property that is destroyed or damaged but also the loss of income from that damage or destruction. In essence, a policy that covers business interruption pays for the losses incurred as a result of the business not being operational.
The simplified earnings form is different from other business interruption policies in that it is calculated with a monthly limit. The form covers only a fraction of the total insurance money per month, with 33% being given on the first month, 25% on the second month. and the rest on the third.
This form does not need coinsurance nor does it matter for the purposes of this policy whether the property is underinsured.