Business income coverage provides additional coverage for extra expenses incurred by you to avoid or minimize the suspension of operations after suffering a covered loss.
Extra expenses are expenses over and above those that would’ve been incurred for the normal operation of the business. They might include extra pay for overtime work to speed the restoration of the business, the extra cost of moving your business to a temporary location, the cost of research to restore lost data on damaged valuable papers or records and similar items.
Many insurance policies cover extra expenses to avoid or minimize suspension of business and minimize the overall damages. This can include expenses such as increased rent at the temporary location, rental of temporary furniture fixtures and machinery, and the cost of substitute services such as data processing.
The insurer may pay extra expenses to repair or replace property, but only to the extent that such extra expenses actually reduce the business income loss.
This coverage is usually limited in time or amounts that can be recovered. There are endorsements that allow you to extend the period of restoration and/or the amount of insurance for an additional premium.
Business income and Extra Expense is a very important coverage that many consumers overlook in their property insurance policy.