What type of expenses are covered under extra expense coverage during the period of restoration?

Extra expense coverage is designed to provide financial assistance for costs incurred to minimize the impact of a business interruption during the period of restoration. This type of coverage specifically applies to true extra expenses that are essential for continuing operations and avoiding a complete halt in business activities.

True extra expenses refer to costs that go beyond the normal operating expenses of the business. For instance, if a business needs to rent temporary equipment, hire additional staff, or incur higher costs to expedite repairs to reopen more quickly, these expenses fall under this coverage. The purpose is to keep the business operational, even if it incurs higher-than-normal costs in the process.

General overhead expenses, marketing expenses, and property enhancements do not qualify under extra expense coverage because they do not directly contribute to the immediate continuation of business operations during the recovery phase. General overhead is typically ongoing and not considered “extra” in the context of restoration, marketing expenses focus on promoting the business rather than keeping it operational, and property enhancements relate to upgrades rather than necessary expenses to prevent a business interruption. Thus, these categories are outside the spectrum of what extra expense coverage is intended to protect.