Insurance glossary · How policies work
business income and extra expense.
Business income covers lost income and ongoing bills while a covered loss keeps you closed. Extra expense covers what it costs to stay open, like renting a temporary space.
What does business income insurance pay for?
The net income you lose and the ongoing expenses you keep paying, like payroll, rent and loan payments, while a covered loss, such as a fire, keeps you from operating. It’s meant to leave the business where it would have been without the loss.
What does extra expense cover?
Costs you take on to keep operating or reopen faster after a covered loss, like renting temporary space or equipment, moving operations or paying overtime. They’re covered when they reduce the loss or keep the business running.
What has to happen for business income coverage to apply?
Usually direct physical loss or damage to property from a covered cause, at your premises or a covered location. A slowdown with no physical damage, like a drop in demand, generally isn’t covered.
Is there a waiting period?
Yes. Most policies start paying business income only after a short waiting period, set in the policy, measured from the loss. Extra expense is often covered from the start.
How long does business income coverage pay?
Through the period of restoration: the time it should reasonably take to repair or replace the damaged property and resume operations, sometimes followed by an extended period while customers come back.
What is civil authority coverage?
Business income coverage when a government order blocks access to your premises because of physical damage nearby, for a limited time. It’s one of several extensions that cover losses without damage to your own property.
What is dependent property coverage?
Coverage for lost income when a key supplier or customer suffers a covered loss and that interrupts your business. It’s added by endorsement and important for businesses that rely on a few suppliers.
How much business income coverage do I need?
Enough to cover lost profit and continuing expenses for the realistic time it would take to recover from a major loss. A business income worksheet helps estimate it, and the coinsurance page covers why underestimating can reduce a claim.
by trade.
- General contractorsA fire at your yard or shop can stop work on every job; extra expense covers renting equipment and space to keep going.
- PlumbingLosing the shop and its stock can idle crews; business income covers payroll and lost profit while you rebuild.
- HVACDependent property coverage matters when a single distributor supplies most of your equipment.
- ElectricalExtra expense can cover temporary vehicles and space after a fire at your base of operations.
where you’ll see it.
- Property declarationsA business income and extra expense limit, waiting period and any coinsurance percentage.
- Business income worksheetA form estimating revenue, expenses and recovery time to set the limit.
- Leases and loansRequirements to carry business income coverage for a set number of months of rent or payments.
sized to how long recovery really takes.
Riza works through a business income worksheet with your numbers, sets a limit that fits a realistic recovery period, and adds extensions like dependent property where your business needs them.
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Coverage it touches: Business income · Commercial property