On June 6, 2025, Wheeler, DiUlio & Barnabei hosted the latest installment of First Party Fridays with Tony DiUlio, a free monthly webinar series designed to educate and empower those navigating property insurance claims.
This session took a deep dive into one of the most complex areas of commercial property insurance: business income and extra expense coverage. As Tony explained, this coverage can be a lifeline for businesses trying to recover from a loss, but only if you understand how it works and how to properly document your claim.
What Is Business Income Coverage?
Business income coverage is designed to compensate policyholders for the net income they lose during a covered suspension of operations. It’s important to understand that:
- It covers net, not gross, income
- The loss must result from a direct physical loss at the insured property
- The suspension must be necessary, not just strategic or preferred
A complete shutdown isn’t required—a slowdown in business operations can still trigger coverage. For example, if a fire damages part of a retail store or entertainment space, but the office or storage area remains usable, the loss of revenue from the unusable portion may still be eligible for compensation.
Tony reminded attendees that understanding this starts with reading the full policy. Many commercial policies follow ISO forms, but some use modified versions. Always check the form language for specific definitions, limits, and conditions.
Extra Expense: What Qualifies?
Extra expense coverage helps businesses minimize their downtime and reduce the amount of business income loss. These are costs you wouldn’t normally incur, but do so to keep operations going after a covered event.
Examples of covered extra expenses may include:
- Relocation costs (renting a temporary facility)
- Equipment rental or expedited shipping
- Overtime wages or temporary staffing
- Increased utility costs (like generators or HVAC)
- Fees for forensic accountants or professionals helping reduce downtime
Tony emphasized a simple rule: if the expense helps avoid or shorten the business interruption, it may qualify.
Don’t Forget Civil Authority & Extended Income Coverage
The session also touched on civil authority coverage, which can apply when a nearby property experiences a direct physical loss and causes a shutdown of your operations (e.g., due to a fire, chemical spill, or other safety concern). Even if your property isn’t damaged, you may still be covered.
Also important: many policies include extended business income coverage, which provides up to 30 additional days of coverage after the property is repaired—a crucial buffer for businesses that need time to regain customer traffic or ramp up operations.
Documentation Is Everything
Tony’s advice was clear: start documenting everything on Day 1.
- Save every invoice, receipt, and contract
- Withdraw and track any cash payments
- Keep financial records organized and ready
He also urged attendees to work with a forensic accountant early in the process. Submitting a complete, credible claim from the start can reduce disputes and delays. It’s also critical to explain the “why” behind your numbers: why payroll was maintained, why certain expenses were incurred, and how they supported business continuity.
Policy Conditions & Time Limits
Business income and extra expense coverage does not last indefinitely. The period of restoration typically begins 72 hours after the loss and ends when operations should reasonably resume. Carriers may reduce payments if they determine that operations could have restarted sooner, so staying proactive is crucial.
Also worth noting: even if your policy expires during the claim, coverage may continue through the full period of restoration if allowed by your policy terms.
New or Growing Businesses: You Still Have Options.
Claims involving newly acquired or expanding businesses often require outside data like comps, industry benchmarks, or past business plans. Tony explained that with enough documentation (such as signed contracts, STAR reports for hotels, or internal communications), these claims can still be successfully supported.
Business income and extra expense coverage can be an essential safeguard for commercial policyholders—but only if claims are supported with solid documentation and a clear understanding of the policy language. As Tony put it, “Your job is to explain why.”
