What defines "Extra Expense" in commercial property coverage?

"Extra Expense" in commercial property coverage specifically refers to the costs that a business incurs as a result of a covered loss that is over and above the normal expenses they would have incurred if no such loss had occurred. This typically pertains to expenses necessary to continue operations during a time of restoration or repair after a covered event, such as a fire or flooding.

The distinction of extra expense is crucial because it emphasizes that these costs are necessitated solely by the situation resulting from the loss, thereby allowing the business to resume operations or minimize business interruption. For instance, a company might need to rent temporary office space or equipment while their own property is being repaired. These costs would not have existed without the covered loss, making them a valid part of the extra expense coverage.

This concept is beneficial as it enables businesses to maintain some level of operation and mitigate further losses during the recovery phase, which aligns with the broader aim of property coverage—to support businesses in regaining their footing after a disruptive event.