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After a cover loss, any extra expense incurred 'to avoid or minimize the suspension of business and to continue operations' is generally paid by an extra expense policy. (Photo by David Handschuh/NYLJ) After a cover loss, any extra expense incurred ‘to avoid or minimize the suspension of business and to continue operations’ is generally paid by an extra expense policy. (Photo by David Handschuh/NYLJ)

Analysis brought to you by the experts at FC&S Online, trusted experts in policy analysis and the recognized authority on insurance. To find out more — or to have YOUR coverage question answered — visit the National Underwriter website, or contact the editors via Twitter: @FCSbulletins.

Question: The insured has a loss of income with extra expense form. Their building was damaged so they rented a temporary location to continue operations until the original location is repaired.  The policy identifies two types of extra expenses. One is any extra expense “other than the expense to replace property.” We refer to this as pure extra expense since there is no requirement that these expenses be limited to the extent they reduces the loss otherwise payable. The other coverage is for the extra expense to replace property, but that is limited to the extent it reduces the amount otherwise payable, i.e. the expenses must offset the BI claim.

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