What is Extra Expense Insurance Coverage?

A typical property insurance policy will cover the cost to repair or replace buildings or equipment.  However, it will not cover extra expense a business is likely to experience during the time period from the occurrence of the loss to the resumption of the business operation.

According to the International Risk Management Institute, “Extra Expense Insurance is commercial property insurance that pays for additional costs in excess of normal operating expenses that an organization incurs to continue operations while its property is being repaired or replaced after having been damaged by a covered cause of loss”. If you are operating a business that cannot afford to stop production for any period of time, Extra Expense Insurance is likely right for you.

Claim example:

There is a fire in your production building and you are required to temporarily share space at another location. The expenses you incur, including sending out notices to your clientele to notify them of the change, the cost of renting the temporary space and equipment, the cost of staff sharing, the cost of utilities as well as the cost associated with setting up the new phone lines to receive calls from clients, are all covered under Extra Expense Insurance coverage.

These types of excess expenses must be incurred to avoid or minimize the suspension of business due to a covered cause of loss, and can include repairs and replacement of property as well as the restoration of lost information. We recommend Extra Expense coverage for all our clients. Limits can be adjusted according to need.