Business overhead expense (BOE) insurance is a very valuable safeguard that helps to pay overhead expenses for an insured person in the event that he or she becomes disabled. Any BOE policy will pay out a monthly benefit which is calculated on actual expenses incurred by the business rather than on expected profits. It’s no exaggeration to say that business overhead expense insurance can literally be a lifesaver for a company when an owner is unable to work and cannot maintain the same level of incoming revenue as before. Here are some of the most important things to know about business overhead expense insurance and the impact it can have on a business and a business owner.
What Exactly Does BOE Cover?
BOE insurance is intended to cover business owners, particularly small business owners, who operate companies that require their personal involvement. These policies are typically renewed annually until a business owner reaches the age of 65. The expenses covered by BOE insurance are those which are necessary to keep the business operating and functional. Some typical expenses covered by BOE insurance would be utilities, accounting fees, rent, professional membership dues, insurance premiums for employees, salaries, office equipment expenses, property taxes, payroll taxes, and professional subscriptions.
What Is Not Covered by BOE Insurance?
One of the main things which BOE insurance does not cover is the cost of inventory, so this expense must be managed in some other way. While payroll and property taxes are covered, income taxes are generally not covered by BOE insurance. While BOE does cover employee salaries and sometimes even covers worker salaries for those hired to replace the insured individual, it does not cover payouts that will replace the insured individual’s personal salary. If the insured individual desires to receive some kind of salary payment during the disability period, that would have to be covered by some other type of insurance, such as disability insurance.
How Is Disability Insurance Different from BOE Insurance?
Essentially, they aren’t different in that they’re both triggered on a disability event, but they are different in the amounts of benefits they pay and to whom they’re paid. Both of them will offer coverage when an insured person undergoes some kind of disability that lies under the terms of the policy. However, disability insurance will protect the personal finances and the income of an insured individual, while BOE insurance will only cover expenses related to maintaining business operations. It is therefore advisable for any business owner to obtain both disability insurance and BOE insurance in order to be adequately covered in the event of some kind of disability.
How Much Does BOE Insurance Payout?
In reality, it depends. It depends on the amount of overhead the company needs to cover. But the practical answer is between $30,000-$50,000 per month. In some cases, that number can even be slightly higher. The goal of this type of insurance is to keep the business afloat for the purposes of either selling the business, or giving the owner time to recover and return. Therefore, the payouts are usually quite high, but they don’t last forever. For example, a $50k payout policy is typically designed to payout for 12-18 months. Again, this is ideal to help the owner find a new buyer, or have time to recover and return to running the business.
Congevity can answer any questions you may have about business overhead expense insurance, and we can set you up with a policy that will deliver the right kind of coverage for your business. This could be just what your business needs, so don’t hesitate to contact us as soon as possible.