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Buying Business Interruption Insurance? Some Answers About Extra Expenses Coverage

Are you buying business interruption insurance? This is an important, but often overlooked, part of ensuring that your small business can weather disasters. But when you buy interruption insurance, you will need to make a few decisions about what coverage to include. One of these is whether or not to add 'extra expense' coverage. What does this mean and do you need it? Here are a few answers.

What Is 'Extra Expenses' Coverage?

This optional coverage reimburses your business for additional costs related to a covered disruption in your ability to earn income. Consider an office whose roof was damaged by a hurricane covered in your main policy. The interruption insurance will pay for your lost revenue if you have to shut down the office until the roof is fixed.

However, what if you could carry on business operations if you moved to a nearby rented space? The cost of doing so would be 'extra' in that it's not a normal operating cost. But it helps reduce how much income you lose, so it's beneficial to all. Therefore, your 'extra expenses' coverage might include hiring movers, paying overtime for employees to set up and disassemble their workspaces, and the cost of the rented space. 

When Is Extra Expenses Coverage Important?

Should you buy this extra coverage? Generally, you should if it's vital for your business to become functional as soon as possible. If your customers won't wait or if they turn to competitors even if you're gone for even a few days, you need to get back in the game as quickly as possible. If it would be relatively simple to relocate your business and find temporary equipment, it behooves you to use this option. 

How Do You Buy Extra Expenses Insurance?

If you need extra expense coverage, how can you buy it? The good news is that it's fairly easy and inexpensive to add it. You may opt to include it in a 'rider' or addendum to your business interruption policy. You may also buy a separate policy. This works well, for example, if you want to cover extra expenses only for certain disruptions. You may also find it bundled into business owner policies or property insurance packages. 

Where Can You Learn More?

What to know more? Learn about the specifics of coverage available in your state and in your industry by meeting with a commercial insurance agent today.