Protects your business by covering extra, unexpected costs you incur to keep operating after a disruption like a fire, power outage, or equipment failure.
Running a business is unpredictable. Even with good planning, accidents and interruptions can happen when you least expect them. That’s where Extra Expense Insurance comes in. This type of coverage helps pay for the additional costs your business faces to keep operating after something goes wrong.
In simple terms, Extra Expense Insurance helps you stay open — or get back on your feet faster — when a disruption hits.
What Is Extra Expense Insurance in Plain English?
Extra Expense Insurance is a type of property insurance that covers unusual or “extra” costs you wouldn’t normally have if your business hadn’t been interrupted.
These expenses are usually necessary to reduce downtime, continue serving customers, or maintain operations after a covered loss. Think of them as emergency spending to keep your business alive during a crisis.
For example, if a storm knocks out power to your building, Extra Expense Insurance might pay for:
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Renting a backup generator
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Temporary office space
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Express equipment repairs
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Extra shipping or transportation costs
These aren’t everyday expenses — they only happen because something unexpected disrupted your business.
How Extra Expense Insurance Works
When a covered event damages your business property or disrupts normal operations, Extra Expense Insurance kicks in to cover the added costs you incur to keep going.
It doesn’t replace your lost income directly. Instead, it focuses on the extra money you have to spend to avoid shutting down.
Let’s say you own a small restaurant. A fire damages part of your kitchen, but you want to reopen quickly. You might rent temporary cooking equipment or move operations to a nearby shared kitchen. Those extra costs can be covered by Extra Expense Insurance if the damage event is covered under your policy.
What Does Extra Expense Insurance Typically Cover?
Coverage varies by policy, but Extra Expense Insurance often includes:
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Backup generators or alternate power sources
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Temporary locations or rented facilities
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Overtime wages to speed up repairs
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Expedited shipping for replacement equipment
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IT setup costs if systems need to be moved
The key idea is that these expenses help shorten downtime or allow your operations to continue despite the interruption.
What This Insurance Does Not Cover
Extra Expense Insurance is not the same as Business Income Insurance.
It generally does not cover:
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Lost profits by themselves
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Normal operating expenses you’d have anyway
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Costs unrelated to the interruption
It only covers expenses above and beyond your normal budget — and only when they’re directly tied to a covered loss.
Who Needs Extra Expense Insurance?
Extra Expense Insurance can be especially valuable for:
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Retail stores
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Restaurants and cafés
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Offices that rely on power or technology
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Medical practices
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Manufacturers and warehouses
If closing your business even for a short time would hurt your reputation, customer relationships, or cash flow, this coverage can be a lifesaver.
Extra Expense Insurance vs. Business Interruption Insurance
These two are often bundled together, but they do different jobs.
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Business Interruption Insurance helps replace lost income
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Extra Expense Insurance pays for added costs to keep operating
They work best as a team. One helps with revenue loss, while the other covers the emergency spending needed to stay operational.
Why Extra Expense Insurance Matters
Business disruptions don’t just cause lost sales — they often force you to spend more money at the worst possible time. Without Extra Expense Insurance, those unexpected costs come straight out of your pocket.
Having this coverage means you can act fast, protect your customers, and keep your business running without draining your savings.
In short, Extra Expense Insurance gives you flexibility, speed, and peace of mind when normal business life gets thrown off track.
If your business depends on staying open and responsive, it’s a smart layer of protection worth considering.
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