There is a financial ripple effect when your business property is damaged or lost. You’re dealing with direct loss, but also loss as a consequence of the damage — equipment you can’t use, job delays, downtime waiting for repairs, etc. Several kinds of policies address indirect loss exposures. The two most common forms are Business Income Coverage and Extra Expense Coverage.
Business Income Coverage
Just as you buy fire insurance to recover loss of property, you may need business income coverage for expenses that you cannot or do not wish to discontinue. Usually, we write the policy to cover losses resulting from insured perils on the building or on business personal property. This coverage is the Basic Form, Broad Form or Special Form.
Extra Expense Coverage
"Extra expense" refers to the costs a firm may incur because a property loss has occurred. For example, if it will take several months to repair a damaged location, you may decide to rent another building and move the business there temporarily. Of course, this will require additional rental expense, plus the cost of moving there (and back), and advertising to let your customers know you’ve moved.
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