SITUATION
H. Abbe International, owned by Herb Abbe, is a travel agency and freight forwarder located in downtown Minneapolis. When the building that housed the firm's offices suffered damage as a result of arson, the firm was forced to relocate its 2 computers and 11 employees. Moving into the offices of a client, Abbe worked from this temporary location for a month before returning to his regular offices. The disruption cost him about $70,000 in lost business and moving expenses. In addition, he had to lay off four employees.

Question 1 What are the major types of risk faced by a firm such as H. Abbe International? What kind of insurance will cover these risks?

Question 2 What kind of insurance would have helped Abbe cope with the loss resulting from arson? In purchasing this kind of insurance, what questions must be answered about the amount and terms?

Question 3 Would you have recommended that Abbe purchase insurance that would have covered the losses in this case?