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Foundations of Casualty Actuarial Science

malfunctioning. Both individuals and entities have
property that may be the subject of loss.

(iii)Net income losses - this can occur when either
income gets reduced or expenses get increased.
Net income losses occur usually due to property
damage. A loss first affects the entity to which it
occurs, and then may affect the other entities,
such as the customers. Revenues may decrease
due to loss of rent, interruption in operations,
contingent business interruption due to losses by
suppliers or customers, and loss of profits on
finished goods.

Some expenses may continue even when
operations are interrupted. There may be
expediting expenses to enable the entity to return
to normalcy as soon as possible. Net income losses
occur most often to entities. However, individuals
can also suffer from net income loss, such as extra
expenditure due to rent when the residence
becomes uninhabitable due to fire, but mortgage
payments are still due.

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