We have a loss involving a beauty salon that purchased only $15,000.00 in coverage on a businessowners form, BP 00 02 01 97. The policy covers personal property as well as improvements and betterments. Therefore, they were very short of coverage for the personal prKentucky Subscriberoperty. We have established the cut off date for the necessary time to get back into business, and the insured and her attorney have submitted approximately $60,000.00 of repairs at the permanent location. Possibly, some of them are at a temporary location. Could you please comment as to whether or not this $60,000.00 would be covered under the extra expense portion of this policy?

Kentucky Subscriber

The ISO businessowners form promises, in g.(1)(b)(ii), to pay for extra expenses incurred to avoid or minimize suspension and continue operations, including the cost to equip and operate the replacement or temporary location. The costs must have been incurred to avoid or minimize the suspension and continue operating. To repair or replace property at the permanent location, the form will pay extra expense "to the extent it reduces the amount of loss that otherwise would have been payable under" extra expense or business income (see g. (3) (a)). So, the portion of the $60,000 that was used to repair or replace property at the permanent location may be covered, but only to the extent that the amount of the loss that otherwise would have been payable is reduced. Also covered is the portion of the $60,000 in extra expense that was spent in order to avoid or minimize the period of suspension and continue operations at the temporary location.