Simplified Earnings Form

What Does Simplified Earnings Form Mean?

A Simplified Earnings Form, now known as the Monthly Limit of Indemnity Form, is a type of insurance policy that covers business interruptions caused by adverse events, such as fire damage. It provides compensation for losses incurred when business operations are temporarily suspended or discontinued. The insured receives payments up to a predetermined monthly limit while they work to rebuild their business.

Insuranceopedia Explains Simplified Earnings Form

Business interruption insurance differs from property insurance in that it not only covers the property that is damaged or destroyed but also compensates for the loss of income resulting from that damage. Essentially, this type of insurance helps cover the financial losses incurred when a business cannot operate due to an interruption.

The Simplified Earnings Form, however, differs from other business interruption policies by offering coverage with a monthly limit. Under this form, only a portion of the total insured amount is paid out each month: 33% in the first month, 25% in the second month, and the remainder in the third month.

This form does not require coinsurance, nor does it matter whether the property is underinsured for the purposes of the policy.