A fire damages more than property: the business may have to close. The Business Income (and Extra Expense) Coverage Form covers both kinds of indirect loss. Business income is the net income (net profit or loss before income taxes) that would have been earned, plus continuing normal operating expenses, including payroll. Example: a shop would have netted $30,000 during the closure and still pays $18,000 of continuing expenses including payroll, while $10,000 of expenses stop. The business income loss is $48,000.

Extra expense is the necessary expense during the period of restoration that the insured would not have incurred if there had been no direct physical loss or damage from a covered cause, such as renting temporary space to keep operating.

Timing: for business income, the period of restoration starts 72 hours after the direct physical loss, which acts as a waiting period. For extra expense it starts immediately, because the insured may have to spend money at once to keep going.

The trigger: coverage is activated only when the suspension is caused by direct physical loss or damage to property at the described premises from a covered cause of loss. Falling sales with no property damage do not qualify. In Another Planet Entertainment v. Vigilant (2024), the California Supreme Court held that direct physical loss or damage requires a distinct, demonstrable physical alteration that injures or impairs the property; being unable to use it as intended is not enough on its own.