Business Interruption and Extra Expense Coverage

"Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.

Extra Expense Insurance

Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period. Usually, extra expenses will be paid if they help to decrease business interruption costs. In some instances, extra expense insurance alone may provide sufficient coverage, without the purchase of business interruption insurance."
( the above quoted from the insurance information institute)

Commercial insurance is very different than your standard homeowners policies and each policy should be referred to and read carefully to determine exactly what is covered and when coverage is triggered.

Package policies such as Business Owners Package Policies (BOP's)  provide coverage based not only on covered perils such as windstorm but also for actions by civil authorities ( such as mandatory evacuations). Coverage may have been provided for as long as the business sustains damage up to 12 months or for a set period of time such as 2-4 weeks for civil authority.

Because of the complexities involved and the many different policies issued from both admitted and non admitted companies it is imperative to refer to you actual policy.

For further information please contact Richard O. Collins, CIC, AAI, CRM