Extra Expense Insurance
What Does Extra Expense Insurance Mean?
Extra expense insurance provides coverage for businesses to offset additional costs incurred if they must temporarily shut down. Unlike business interruption insurance, it covers specific expenses not included in the latter. However, these expenses must be deemed both necessary and reasonable. The coverage period extends from the time the business ceases operations until it resumes normal functioning.
Insuranceopedia Explains Extra Expense Insurance
After a disaster like a destructive fire or earthquake, a business may need to temporarily halt operations. While other types of business insurance typically cover expenses such as property damage and lost revenue, extra expense insurance provides coverage for additional necessary and reasonable costs. For instance, a business might need to establish a temporary office and pay for utilities, phone connections, and internet services. These expenses could be covered under extra expense insurance but may not qualify under a business interruption policy. However, combining both policies can significantly reduce financial losses for business owners during periods of disruption.
