What kind of coverage may protect Jay's Chip Factory for lost business income while waiting for Bags, Inc. to repair its bag-making machine?

The type of coverage that would protect Jay's Chip Factory for lost business income while waiting for Bags, Inc. to repair its bag-making machine is known as Contingent Business Income and Extra Expense. This coverage is designed to address the financial impact on a business due to disruptions in operations caused by events affecting another business that it relies on. In this case, since Jay's Chip Factory relies on Bags, Inc. for its packaging materials, if Bags, Inc. experiences a delay in repairing its machine, it may lead to a loss of income for Jay's Chip Factory.

Contingent Business Income coverage specifically comes into play when a business depends on the operations of a supplier or customer. Unlike standard Business Income coverage, which focuses primarily on direct physical damage to the business's own property and operations, the contingent coverage understands the indirect consequences of a supplier or customer experiencing a loss, thereby impacting the insured's ability to conduct business.

Extra Expense coverage, often included alongside Business Income coverage, can help an insured business incur necessary expenditures to maintain operations or minimize losses while waiting for repairs, reinforcing the importance of having this type of protection.

Therefore, the correct choice highlights the interconnected nature of businesses and how interruptions can lead to financially significant challenges even if the