Business Overhead Expense Insurance


business overhead expense insurance

Business Overhead Expense Insurance is a type of insurance designed to provide financial protection for small business owners in case they become unable to work due to a disability.

It covers the ongoing expenses of a business, such as rent, utilities, salaries, and other overhead costs, ensuring that the business can continue operating even if the owner is unable to generate income. If this is your first time hearing about this insurance, then you’re in the right post. All you have to do is read to the end.

What is Business Overhead Expense Insurance?

Business Overhead Expense Insurance is specifically tailored to cover the essential operating expenses of a business if the owner or a key employee becomes disabled and unable to work. Unlike disability insurance, which replaces lost income, BOE insurance focuses on maintaining the business’s day-to-day operations.

Instead, BOE insurance zeroes in on upholding the routine functions and financial obligations of the business during such unforeseen circumstances.

How Does Business Overhead Expense Insurance Work?

When a business owner purchases BOE insurance, they pay a monthly premium to the insurance company. In return, the insurance company agrees to reimburse the business for eligible overhead expenses if the owner becomes disabled and unable to work. The coverage typically lasts for a specified period, such as one or two years, providing a financial safety net during the owner’s recovery period.

What Does Business Overhead Expense Insurance Cover?

BOE insurance covers various essential expenses necessary for the ongoing operation of a business. These expenses may include:

  • Rent or mortgage payments for business premises.
  • Utilities, such as electricity, water, and internet.
  • Employee salaries and wages.
  • Insurance premiums for other business policies.
  • Office supplies and equipment maintenance.
  • Taxes and accounting fees.
  • Loan payments and other financial obligations.

Pros of Business Overhead Expense Insurance

Business overhead expense insurance has several benefits for ensuring business continuity in unforeseen circumstances. Here’s how BOE insurance can help;

Continuity of Operations

BOE insurance ensures that your business can keep running even if you’re unable to be there due to illness or disability. It covers essential expenses like rent, utilities, salaries, taxes, and other fixed costs, keeping your business running smoothly and maintaining its reputation.

Preserving Cash Reserves

By covering crucial business expenses, BOE insurance helps you preserve your cash reserves. This is especially valuable during unexpected events or extended absences, preventing your business from falling behind on bills or rent.

Retaining Key Employees

Meeting payroll is vital for retaining key employees. BOE insurance ensures that policy benefits can cover employee salaries, preventing turnover and allowing your business to maintain its workforce.

Protecting Personal Savings

BOE insurance reduces the need to dip into personal savings to cover business expenses during unexpected absences. This is particularly important for small business owners who may rely on personal savings for financing.

Partial Disability Coverage

Some BOE policies offer partial benefits if the business owner or key employee is partially disabled. This ensures financial support even if they can’t work at full capacity.

Guaranteed Renewable Policy

BOE policies may be guaranteed renewable, meaning they can’t be cancelled as long as premiums are paid. This provides security for business owners, ensuring benefits are available when needed.

Tax Benefits

Premiums paid for BOE coverage may be tax-deductible, reducing the overall cost of the policy. Additionally, business expenses paid with policy benefits may also be tax-deductible, further easing the financial burden on the business.

Cons of BOE Insurance

BOE insurance has its upsides, but it also comes with some drawbacks to consider. They include;

No Direct Benefits to Policyholders

BOE policies don’t pay benefits directly to the policyholder. Instead, they cover business expenses, so you’ll still need separate disability coverage to replace lost income. This might mean buying extra disability coverage for enough income replacement.

Time-Limited Benefits

Benefits from BOE policies usually have a time limit and won’t be paid indefinitely. Typically, the policy might cover expenses for 12 to 24 months. If your disability lasts longer, you’ll need other income sources to cover ongoing business costs.

Taxable Income

Any benefits you get from BOE policies might count as taxable income for your business. This means you might owe taxes on the benefits, lowering the actual amount you receive.

Maximum Monthly Benefit Limit

BOE policies often set a maximum monthly benefit limit, which might be less than what you need to keep your business going. You might have to find extra income sources to cover the rest of your business expenses.

It’s crucial to check that the policy’s benefit limit is enough to cover all your ongoing business expenses.

How to Get Business Overhead Expense Insurance

The process is very easy;

  • Research providers: Look for insurance companies that offer BOE insurance. You can search online or ask for recommendations from other business owners or insurance agents.
  • Compare policies: Review the BOE policies offered by different insurance providers. Compare their coverage, benefits, premiums, and any limitations or exclusions.
  • Determine coverage needs: Assess your business’s overhead expenses to determine how much coverage you need. Consider factors like rent, utilities, employee salaries, taxes, and other fixed costs.
  • Request quotes: Contact insurance providers to request quotes for BOE insurance based on your coverage needs. Provide them with accurate information about your business to get an accurate quote.
  • Review and select: Review the quotes you receive and compare them carefully. Choose the BOE policy that offers the coverage you need at a price you can afford.
  • Apply: Once you’ve chosen a BOE policy, complete the application form provided by the insurance provider. Provide any required documentation and information accurately and honestly.
  • Undergo underwriting: The insurance company will review your application and may conduct underwriting, which involves assessing your risk factors. They may request additional information or medical exams.
  • Pay premiums: If your application is approved, you’ll need to pay the premiums for your BOE insurance policy. The premiums can usually be paid monthly, quarterly, or annually, depending on the insurer.
  • Receive policy: Once you’ve paid the premiums, you’ll receive your BOE insurance policy documents. Review them carefully to ensure they reflect the coverage you agreed upon.

Factors to Consider When Choosing BOE

When considering BOE insurance, there are several key factors to keep in mind to ensure you select the right policy for your business needs;

Coverage Needs

Begin by assessing your business’s regular expenses, such as rent, utilities, and employee salaries. Ensure that the policy you choose adequately covers these essential costs to keep your business operational if you’re unable to work due to disability.

Budgetary Considerations

Take a close look at your budget and determine what you can afford to spend on insurance premiums. It’s essential to strike a balance between finding a policy with affordable premiums while still providing sufficient coverage to meet your needs.

Provider Reputation

Research insurance companies that offer BOE insurance and evaluate their reputations. Look for insurers known for their reliability, excellent customer service, and fair claims processing practices.

Policy Terms and Conditions

Take the time to thoroughly review the terms and conditions of any policy you’re considering. Pay close attention to details such as waiting periods before benefits take effect and the duration of coverage.

Exclusions and Limitations

Be sure to understand what the policy does not cover and any limitations that may apply. Identifying potential gaps in coverage will help ensure that your business remains protected in the event of a disability.

Customer Support

Consider the level of customer support provided by the insurance company. Prompt and efficient assistance during the claims process is essential, so choose an insurer known for its responsive customer service.


BOE insurance is like a safety net for small business owners. It’s there to help if you can’t work due to a disability. This insurance covers important expenses like rent and utilities so your business can keep running smoothly while you focus on getting better. It’s all about giving you peace of mind during tough times.


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