That’s weird.
I’m going to ask that you provide me with a link to your site so that I can have a closer look at what’s happening from your end and be in a better position to pinpoint any errors that are being thrown as a result of this.
I’m also going to ask that while you’re at it, please disable all of your third-party plugins and see if this issue still exists.
If it resolves the issue I am going to then ask you to activate the disabled plugins one by one and test the page to see if we can isolate the conflicting plugin if that is the case.
Also, ensure that you’re using the latest version of the theme and that your plugins are up to date.
I have tested it on my test site and confirmed this is how it is working when “show post excerpts?” theme option is enabled.
You can resolve this issue by adding post content along with image markup in the excerpt field of post as described on this page http://www.wpbeginner.com/glossary/excerpt/