Many businesses are seeking ways to
recoup their losses caused by the coronavirus pandemic and obligatory
shutdowns. For many, that means turning to their Business Interruption
insurance, which may include coverage for extra expenses.
What is Extra Expense Coverage?
Extra expense coverage is a type of
insurance that can be added to your commercial property policy for business
interruption. This rider is designed to cover additional costs and non-ordinary
expenses that a policy holder’s company incurs after being damaged by a covered
peril or disruptive event.
This coverage can be essential for
businesses devastated by the COVID 19 crisis. Whereas business interruption
insurance covers “normal” expenses after temporary closures— such as employee
wages, leases, and loan payments— extra expense insurance covers items beyond
the routine operating expenses that are crucial to remaining solvent.
Extra expense coverage can be
purchased in conjunction with your business interruption insurance, as a rider
to your commercial policy, as part of your business owner policy, or by itself.
Business owners whose livelihoods depend on having a brick and mortar physical
location from which to operate often benefit from extra expense coverage. This
includes restaurants, hotels, auto-repair shops, and other businesses in the
service industry.
Cash for Non-Ordinary Costs to Stay Solvent
When a covered loss or peril threatens
your business with permanent closure, extra expense coverage should kick in.
While this insurance does not pay for repair costs or restoration of damaged
property or equipment, it does cover extraordinary expenses incurred by
businesses to continue operations and mitigate further losses.
What constitutes expenses that are
beyond standard operating costs? In most scenarios, these occur when the
policyholder cannot operate out of their usual physical location because of an
insured peril or event.
This coverage should help alleviate
the damages during the company’s restoration and address costs outside of those
for repairing the physical property. The period of restoration typically begins
on the date of the covered loss and ends when your business is up and running
as usual.
Examples of extra expenses can
include, but are not limited to:
- Renting a
temporary office space or place of business - Moving expenses
to a temporary location - Replacement of
furniture and infrastructure - Hiring additional
employees during the transition period - Leasing or
renting needed equipment to continue normal business operations - Overtime wages
for employees
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Reduce the Impact of a State-Ordered Shutdown
Extra expense coverage can lessen the
financial blow of government-ordered closures resulting from the global
pandemic. However, insurance companies argue that these expenses must be
incurred because of physical damage by a covered disruption or event under your
policy.
Legal Support for Business Interruption Losses in NYC
Business owners can get a head-start on recovering their COVID 19 pandemic losses by consulting with the legal team of Douglas & London. A New York City business interruption insurance lawyer can review the language of your commercial property policy and extra expense endorsements, assist with filing a claim, and advise you on legal action where appropriate. Reach out today to arrange a confidential case review, free of charge. Our legal support staff is available 24/7.
Our attorneys work strictly on
contingency, so there are no barriers to getting high-caliber legal
representation.
