Washington Property & Casualty Exam 2025 – 400 Free Practice Questions to Pass the Exam

An Extra Expense Policy is specifically designed to cover the additional costs that a business incurs to continue its operations after a loss. This type of policy helps businesses minimize the impact of disruptions caused by events such as fires, natural disasters, or other incidents that could halt operations.

When a business experiences a significant loss—like damage to a facility or equipment—it often needs to pay for extra expenses such as renting temporary spaces, purchasing or leasing equipment, or paying for expedited shipping to maintain production. By covering these costs, the policy enables the business to keep functioning and mitigate the overall financial impact of the loss event.

This coverage is particularly important for businesses that cannot afford to halt operations without incurring significant losses, as it directly supports their continuity strategies. Other options, such as indirect loss of income or physical damages during a collision, address different types of coverage that are not specifically related to extra expenses incurred for continuing operations.