Business expense insurance, also known as business overhead expense (BOE) insurance, is a type of insurance policy designed to protect small business owners or self-employed individuals from financial loss due to the inability to work because of a covered disability or illness.
Unlike disability insurance, which typically provides income replacement for the insured individual, business expense insurance specifically covers ongoing business expenses such as rent, utilities, employee salaries, equipment leases, insurance premiums, and other necessary operational costs. These expenses are crucial for the continuation of the business during the insured individual’s disability.
Typically, the coverage amount is based on the insured’s average monthly business expenses, and the policy will pay out a predetermined monthly benefit to cover these expenses for a specified period, usually up to one or two years.
Business expense insurance is particularly important for small businesses or solo entrepreneurs who may not have a backup plan or sufficient savings to cover ongoing expenses in the event of a disability. It helps ensure that the business can continue to operate smoothly even when the owner or a key employee is unable to work due to a covered disability or illness.
