Which scenario is covered by extra expense insurance?

• A. Increase in property taxes after reassessment
• B. Loss of rental income due to vacancy
• C. Extra expense of a temporary office after the onsite office was destroyed by fire
• D. Flood damage to the building

Answer: (C)

Extra expense coverage pays the additional costs a business incurs to keep operating after a covered loss. When the onsite office is destroyed by fire, the business may need a temporary office, a phone system, furniture, equipment, and other moving and setup costs to continue functioning. These are extra costs beyond normal operations, and this type of insurance is specifically designed to cover them so you can maintain continuity while repairs are underway.

The other scenarios don’t fit extra expense coverage. An increase in property taxes after reassessment isn’t an insured expense. Loss of rental income due to vacancy is typically covered under business income (loss of income) coverage, not extra expenses. Flood damage to the building is a property loss that would require property damage coverage or flood-specific coverage, not the extra costs of continuing operations.