Extra Expense Insurance

An important component of business interruption insurance is extra expense coverage.

In short, extra expenses are the increased cost of business after a loss – costs that get an operation back into business quickly. Higher rents for space leased quickly. Increased shipping costs to get replacement equipment fast. The cost of running phone and data lines to temporary office space. The cost of letting your customers know of your temporary location. All these are examples of extra expenses.

Business interruption insurance can include extra expense or exclude it. Some policies provide unlimited protection – called actual loss sustained. Others place a dollar limit on what will be paid. Some policies put restrictions on the amount paid over a period of time. Some policies respond to damage at customers’ and suppliers’ locations.

Of any ten businesses I look at, seven will have errors in the way business income and extra expenses are covered.

How is your coverage?