What is an extended period of indemnity?

What is an Extended Period of Indemnity?

An extended period of indemnity is a provision in business interruption insurance policies that covers the loss of income a business incurs after it has resumed operations but before its income has returned to pre-interruption levels. Typically, business interruption insurance covers loss of income during the period of restoration or repair following a covered event, like a fire or natural disaster, up until the business is reasonably expected to be operating at its pre-disruption level. The extended period of indemnity extends this coverage beyond the physical repair period, providing financial support while the business works to regain its normal customer base and income level. This period is predefined in the policy, often ranging from 30 days to several months, depending on the policy terms and the needs of the business.

How Do Extended Periods of Indemnity Relate to Real Estate?

In real estate, an extended period of indemnity is particularly relevant for property owners and managers who have business interruption insurance as part of their property insurance policies. This provision applies to assets that generate income, such as office buildings, retail centers, residential rentals, and industrial facilities. After a covered event (e.g., fire, flood) disrupts operations, the property may be repaired and functional again, but it might take additional time for tenants to move back in, for occupancy rates to return to normal, or for retail properties to regain their usual customer traffic. The extended period of indemnity ensures that the property owner continues to receive financial support to offset the lost rental income or operational income during this recovery phase, helping to stabilize the financial impact until the property is fully operational and generating its pre-disruption income.

Make real-time data your competitive advantage!

Schedule a demo below to see our multifamily analytics platform and APIs in action.