What is Extra Expense Coverage?

Extra Expense Coverage is a component of commercial property and business income insurance that pays for additional costs you incur to continue operating or minimize the suspension of operations after a covered loss. These are expenses beyond your normal operating costs that you wouldn’t have incurred if the loss hadn’t occurred. Examples include costs to rent temporary kitchen space or equipment, expedited shipping fees to rush equipment repairs or replacements, costs to relocate to a temporary location, increased labor costs from overtime or temporary workers, rental costs for emergency generators or temporary facilities, increased utility costs at a temporary location, advertising to inform customers of your temporary location or reopening, and costs to set up temporary operations. Extra Expense Coverage is typically included with business income coverage and is subject to the same overall policy limits and time restrictions.

What you need to know

Extra Expense Coverage provides financial support for the additional costs required to keep your restaurant operating in some capacity after a covered loss, rather than closing completely during repairs.

What qualifies as extra expenses:

Extra expenses are costs beyond your normal operating expenses that you incur specifically to continue business operations or reduce the period of interruption. These must be expenses you wouldn’t have incurred without the covered loss.

Common extra expenses for restaurants:

• Temporary kitchen rentals – Renting commercial kitchen space to continue food preparation
• Equipment rentals – Temporary cooking equipment, refrigeration, or POS systems
• Relocation costs – Moving to and setting up a temporary location
• Expedited repairs – Rush fees for faster equipment repair or replacement
• Increased labor costs – Overtime pay or temporary workers to maintain operations
• Transportation costs – Shuttling food between temporary kitchen and serving location
• Marketing expenses – Advertising your temporary location or reopening
• Temporary facilities – Generators, tents, or mobile units to maintain service

How coverage works:

Extra Expense Coverage is typically included with business income coverage as part of your commercial property policy or business owner’s policy. The coverage is subject to your policy limits and the period of restoration, and pays for reasonable expenses necessary to continue operations.

Why it matters for Restaurant Owners

When disaster strikes your restaurant—whether it’s a kitchen fire, equipment breakdown, or other covered event—you face a critical decision: do you close completely until repairs are finished, or do you try to keep operating in some capacity to retain customers and revenue? Extra Expense Coverage gives you the financial resources to choose the latter option.

Creative solutions to maintain operations:

For example, if your kitchen is damaged but your dining room is intact, you might rent commercial kitchen space elsewhere to continue food preparation, then transport finished meals to your location for service. Or you might set up a temporary takeout-only operation in a food truck while your restaurant is rebuilt. These creative solutions to keep your business operating require significant additional expenses that you wouldn’t normally incur, and Extra Expense Coverage pays for them.

The strategic value of staying operational:

The goal is to prevent or minimize the loss of business income by allowing you to maintain operations, keep your staff employed, and retain your customer base during the restoration period. Restaurants that close completely for months often lose customers permanently, as regulars develop new dining habits elsewhere.

The cost of not having this coverage:

Without this coverage, you might be forced to close completely because you can’t afford the extra costs of temporary operations, resulting in much greater long-term financial damage as customers go elsewhere and may never return. The extra expenses to stay operational are often far less costly than the total revenue loss from a complete shutdown, but most restaurants can’t afford these expenses out of pocket without insurance coverage.