Commercial Property Insurance May Cover "Extra Expenses"

Many businesses buy business interruption coverage to cover a loss of business income in the event of a covered loss. Business income provisions generally provide benefits for an amount of time designated in the policy, typically termed the period of restoration, or until the business is able to resume operations.

Most commercial policies have additional business protections that might fall under the business interruption umbrella, such as "extra expense coverage" or other added coverages to cover specialized losses such as valued papers, electronic data, debris removal, etc. Generally, "extra expense" can cover relocation costs for a business or increased labor costs when a business uses best efforts to mitigate the business interruption and continues operation. "Extra expense" is often defined as the necessary expenses during the period of restoration that would not have been incurred without the loss. Typical commercial policies exclude or provide limited coverage for losses to valuable papers, electronic data, and records. In the age of electronic data, computers are necessary in almost every business and valuable records are kept on site on local computer terminals. Extra coverage for databases and other electronic media should be considered. It just may be such specialized coverage saves an insured extra headache and aids in a more complete and speedy loss recovery.

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