Extra expense coverage generally helps pay for reasonable and necessary costs a business incurs to continue operating, or to reduce the length of an interruption, following a covered property loss. Disputes over these costs can also be resolved through appraisal.
Common examples of extra expenses include temporary relocation costs, equipment rental, expedited shipping, or overtime labor used specifically to minimize the interruption to the business.
A frequent area of disagreement is whether a specific expense was truly reasonable and necessary in response to the loss, versus a cost the business would have incurred anyway or one that exceeded what was actually needed.
Documentation plays a central role in extra expense disputes, since receipts, invoices, and a clear explanation of how each expense related directly to reducing the interruption help support the claimed amount.
As with other business interruption issues, appraisal focuses on resolving the disputed dollar amount of these covered extra expenses, relying on thorough documentation and, when needed, financial expertise to reach a fair figure.
This article is general education about how the appraisal process commonly works. It is not legal advice, and specific procedures can vary by state and policy. If you have questions about your own claim, review your policy language and talk with your insurance company, agent, or an attorney familiar with your state’s laws.
Russ Lis is a working property insurance appraiser and umpire based in Minnesota, serving clients nationwide. Have a question about your own claim? Contact Appraisal Resolution.