Business Overhead Expense Protection

by Thom Tracy

1 min read

Business overhead expense protection is a type of insurance policy that pays the ongoing financial obligations of a business in the event a business owner is physically unable to perform his duties. If a proprietor becomes incapacitated due to illness or injury, the policy offers monetary benefits that protect the business from collapse. These funds are used to pay costs, such as employee salaries and utilities. These policies can be purchased from commercial insurers individually or added as a rider to an existing general liability policy. Policy premiums are pegged to age and health of the owner, in addition to the type of business involved. Monthly coverage amounts vary up to a policy maximum, but these amounts will not exceed the actual expenses incurred by the business. Business overhead expense policies do not indemnify the company for the owner’s salary, as would a disability income policy, nor will the contract pay the salary of a partner or individual brought in to perform the owner’s duties. Typically, premiums paid can be deducted from taxable business income. However, any benefits received are taxable to the business itself. Before payouts begin, the insured must satisfy a waiting period that ranges from 30 to 90 days. Premiums are reduced by opting for longer waiting periods. Business overhead expense is a vital piece of any company’s insurance program. With three in 10 workers becoming disabled each year, this insurance contract will aid in the continuation of the business should the unexpected occur.

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