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BOYLSTON THEATER 559
longer. Advertising, salaries, and miscellaneous operating expenses would be decreased if the period of suspension were sufficiently long.
In determining use and occupancy coverage the treasurer considered $3,750, including $2,000 for film rental, $1,500 for vaudeville and soloist costs, and $250 for heat and light, to be the amount of weekly expense that could be avoided during business suspension and for which no insurance would be necessary. Of the average weekly gross receipts of $17,050, there remained, therefore, a net liability of weekly loss through business interruption of $13,300. This liability for the entire year would total $691,600, and the insurance agency recommended a policy of that amount. From this amount, a per diem liability would be fixed at 1 ^65 of the annual liability of $691,600. The premium on the policy was at the rate of 70% of the 80% reduced rate for the building and approximated an annual payment of $1,350.
With adequate coverage, the insurance agency would be in a position to reimburse the theater in full per diem liability for all claims for losses in anticipated revenue, in accordance with the provisions of the policy, due consideration being given to the experience before the fire and the probable experiences thereafter.
The treasurer questioned the practicability of coverin the theater with use and occupancy insurance to the amount of total gross receipts less the amount of expense that might be avoided during suspension. In his opinion, that proportion of gross receipts which represented profits to the corporation constituted a liability to loss of a different nature from that proportion of gross receipts which represented a return of fixed expense. Inasmuch as a loss in profits because of business interruption merely decreased the annual addition to surplus and was quite similar to the normal business risk in theatrical exhibition, the treasurer considered it unnecessary to protect the theater from such a loss by use and occupancy coverage. Sound theatrical management required close attention to expense and, in his opinion, a reduction in the outlay for insurance presented such an opportunity.
The treasurer estimated that approximately 10% of the weekly gross receipts represented normal profits available for surplus and dividends. He suggested, therefore, a further deduction of $1,700 from the weekly loss through business interruption,