Coverage Extensions in Insurance

Is it Coverage Extensions or Extended Coverage (EC)?

Coverage extension or extended coverage? These are two similar sounding terms used in the insurance industry, but each has different meanings, depending on the insurer and policy–also when the policy was taken out.

Def 1: Coverage Extension

Def 1. Coverage extension is a term that applies when an insurance company covers a loss related to but not officially covered by the insured’s policy. In other words, sometimes an insurance company, after reviewing a claim, may occasionally cover a loss not explicitly listed in a policy. Often this may be done as a courtesy or because it is something that seemingly should be covered but isn’t mentioned. 

An example would be if an insurance company, after a claim is filed by the insured, opts to cover a portion of damages to the personal property of someone who works in the office that is insured. But who is not covered directly by name nor is their equipment, used at work, listed on the policy.

In this case, the company in question has general liability coverage to protect their investments in equipment, technology, office furniture, and more. To qualify for coverage, the company has documented all insurable furniture and/or equipment. 

But what if someone in the office is using the individual property of someone else (Personal Property of Others), such as specialized equipment needed for a project or job? If the property is damaged while at the workplace, in some instances, even though the property is not listed by the insured (and owned by someone else) the insurance company may opt to cover a small amount of liability compensation if certain conditions apply. These conditions may include that the property was damaged onsite at work, is legally in the Care, Custody, and Control of the policyholder, etc.

In cases like these, the amount covered will likely be small, compared to the amount that would have been compensated if the insured had purchased additional coverage for the property in question.

Other potentially coverable events

There are other instances where coverage may be extended at the discretion of the insurer. Some involve protection on newly built or acquired property not yet added to a policy, the loss of valuable papers or records, and more. Contact your insurer to find out what additional losses may be covered by your policy. And always make sure you have the best insurance policies applicable to your industry, such as landlord insurance, business owner protection, general liability insurance, more. 

Def 2: Extended Coverage 

Extended Coverage (EC) may sound similar to coverage extension but it’s indeed different. 

At one point, the term, extended coverage referred to some coverages that could be purchased at an additional cost to add on crucial benefits that in the past were commonly excluded by policies. Also called Additional Coverage, it protected against some common occurrences. 
Many of these perils, once excluded by policies, are now included as part of many basic or standard insurance packages. 

Formerly available only as EC but now commonly part of many insurance packages they include: 

• Hail
• Falling trees
• Windstorms
• Vehicle damage
• Smoke damage.
• Sinkholes
• Volcanic action
• Vandalism

Common to many insurance packages–but not all

However, though hail and windstorms and other extreme events may be covered, this protection is not guaranteed–especially if you live in certain regions. One example of this is if the policyholder lives in one of several U.S. states where disasters such as flooding, heavy hailstorm, and wildfires happen on a regular basis. In these cases, you may need to buy additional insurance for extreme weather.