How does the limit on Extra Expense Coverage generally function in commercial property policies?

The limit on Extra Expense Coverage in commercial property policies is designed to reimburse the insured for expenses that exceed the normal operating costs incurred as a result of a covered loss. This coverage is typically capped at a specific limit established in the policy.

When a claim is made, expenses covered under Extra Expense Coverage are subject to this limit, which is set at the time the policy is written. As claims are paid, this limit effectively reduces, reflecting the total amount of coverage remaining available. This means that after an initial claim is settled, the coverage for any subsequent claims would be limited to what is left of that cap.

Understanding this aspect of Extra Expense Coverage is crucial for businesses as it helps them budget for potential disruptions and expenses that exceed normal operation costs due to unforeseen circumstances, such as property damage.