Why should you consider it?

The ability to continue business operations while you’re disabled can be reassuring to your customers, creditors, and employees. Without business overhead expense coverage, you might find yourself using personal funds or taking on debt to meet business expenses. You might even be forced to close the business. With this coverage, you’ll be able to keep your business afloat, at least for a period of time. And if you decide to sell your business after becoming disabled, the benefits paid under such a policy can keep your business operating and give you some breathing room to find a suitable buyer.

Keep in mind that business overhead expense insurance doesn’t replace the personal disability insurance you need to have–it supplements your personal coverage. While a personal disability policy replaces a portion of your own income if you become disabled, business overhead expense insurance covers the routine expenses that your business may incur during your disability. Your personal disability policy pays benefits to you; your business receives the benefits under the business overhead expense insurance policy.

What’s covered?

Business expenses eligible for reimbursement usually include:

  • Lease, rent, or mortgage payments
  • Loan and mortgage interest
  • Utilities and telephone
  • Laundry, janitorial, and maintenance services
  • Accounting and legal services
  • Professional trade dues and subscriptions
  • Automobile expenses
  • Employee benefits
  • Employee salaries (but not your salary)
  • Salary for a professional replacement for your position (depends on policy)
  • Equipment depreciation
  • Equipment lease payments
  • Insurance premiums
  • Taxes
  • Other fixed expenses normally incurred in running the business

However, certain expenses aren’t eligible for reimbursement under most policies:

  • Your salary
  • Salaries of family members hired after the onset of your disability
  • Salaries of any other co-owners who are members of your profession or occupation (e.g., your business partner in a medical or legal practice)