How Extra Expenses Coverage Can Protect Property During Civil Unrest
When your business is located in an area experiencing civil unrest, proper insurance will be vital to continued operations and recovery from damage. And one important element of this coverage is also a little-known clause: extra expenses coverage. Do you have such coverage? If you're not sure, you would do well to find out. Here are a few answers to key questions that can protect your business and finances.
What Is Extra Expenses Coverage?
Property insurance covers your business assets in the event they are damaged during such emergencies as civil unrest. If a protest in the neighborhood turns violent or devolves into looting, it would cover the replacement of inventory or equipment and repairs to the building's structure.
However, some expenses aren't automatically covered because they fall outside normal replacement and repairs. If you rent a piece of equipment to use while yours is being fixed, for instance, the rental expense may not be covered as either a repair or a replacement.
To provide for such unusual situations, many policies have an added feature to reimburse businesses for unusual expenses that they would not have incurred had the damage not occurred — these aptly named "extra expenses".
When Would You Use Extra Expenses Coverage?
What are some situations when your extra expenses coverage might kick in? There are two main categories.
First, you may have an expense that aids the business in avoiding a business interruption. For example, if the power is cut off in your block due to civil unrest and your business needs refrigeration, you might need to buy a generator to avoid having to close. This added expense was the direct result of the covered incident and was a cost you would not have incurred otherwise.
Second, an expense might help reduce the impact of an unavoidable business interruption. Consider that the damage to your storefront requires extensive repairs that will normally take three weeks to finish before you can open again. However, if you're able to rush the supplies and pay a contractor a higher amount to get the job done and your store open in one week, this additional cost may be covered.
How Can You Find Out More?
Clearly, extra expenses coverage is an important part of having sufficient property insurance when your neighborhood is in distress. Do you have the right coverage to manage these types of additional costs? If you haven't checked on your coverage lately, now is the perfect time to do so. Start by meeting with a property insurance agent today.