Common use of LOSS DETERMINATION Clause in Contracts

LOSS DETERMINATION. A. The amount of business income loss will be determined based on: 1) The net income of the business before the direct physical loss or damage occurred; 2) The likely net income of the business if no physical loss or damage had occurred, but not including any net income that would likely have been earned as a result of an increase in the volume of business due to favorable business conditions caused by the impact of the covered cause of loss on customers or on other businesses; 3) The operating expenses, including payroll expenses, necessary to resume operations with the same quality of service that existed just before the direct physical loss or damage; and 4) Other relevant sources of information, including: a. Your financial records and accounting procedures; b. Bills, invoices and other vouchers; and c. Deeds, liens or contracts. B. The amount of extra expense will be determined based on: 1) All expenses that exceed the normal operating expenses that would have been incurred by operations during the period of restoration if no direct physical loss or damage had occurred. We will deduct from the total of such expenses: a. The salvage value that remains of any property bought for temporary use during the period of restoration, once operations are resumed; and b. Any extra expense that is paid for by other insurance; and 2) Necessary expenses that reduce the business income loss that otherwise would have been incurred. C. We will reduce the amount of your: 1) Business income loss, other than extra expense, to the extent you can resume your operations, in whole or in part, by using damaged or undamaged property (including merchandise or stock) at the described premises or elsewhere. 2) Extra expense loss to the extent you can return operations to normal and discontinue such D. If you do not resume operations, or do not resume operations as quickly as possible, we will pay based on the length of time it would have taken to resume operations as quickly as possible.