Colorado Extra Expense Insurance
As we have seen recently in Colorado, with the wildfires, flooding and mudslides, when disaster hits, it can take a long time for business to return to usual. If fire damages a building and it takes months to repair, the businesses occupying the building often have to relocate at their own expense rather than closing their doors.
The costs of moving and relocating a business can quickly add up, and while business interruption insurance or property insurance may cover some costs, they may not cover them all. In cases like this, we recommend businesses look into purchasing extra expenses insurance.
What is it?Extra expenses insurance covers the insured from the day of the loss to the day that repairs are complete and covers expenses that are beyond the normal cost of doing business. This includes the costs to set up in a new location (including moving fees, temporary signage, etc.) or costs that allow the business to function where it currently is (e.g. generators), reducing the impact of a shutdown, overtime wages, expediting expenses, lost profits due to the business being shutdown, or, in some instances, repairing/replacing damaged property, where it would reduce the overall extra costs. Extra expenses insurance is often part or a business owner’s policy or tied with a business interruption policy but in some cases, can be purchased separately. Many businesses in Colorado would benefit by having this coverage in their insurance policy.
How long does coverage last and what will is cover?As mentioned above, extra expenses insurance covers from the day of loss to the day either a) the building is repaired/replaced or b) you have moved into a new, permanent location. This is called the period of restoration, and it is considered a reasonable period in which repairs can take place. It doesn’t include if any environmental testing required by Colorado state law or federal law has to be done or for clean up of pollutants. Those would be covered under an Ordinance or Law-Increased Period of Restoration endorsement, so it is important to be aware of what all is involved to get the business back up and running.
Which business types benefit the most from this coverageAccording to this article, how you can tell if your business should purchase extra expense insurance is if:
- It provides continuous services that your customers depend on seven days a week. Examples are data centers, security services, and airport shuttle services.
- It cannot shut down because the services you provide are essential to the community. Examples are hospitals, medical clinics, nursing homes, homeless shelters, and banks.
- It can continue to operate from a temporary location to avoid or minimize a shutdown.