Business Overhead Expense Insurance in New York
What it covers, what it does not, and how it differs from key-person and buy-sell coverage.
Business overhead expense (BOE) insurance is a type of disability insurance for business owners. If you are disabled and cannot work, it reimburses the fixed expenses that keep your business open, such as rent, utilities, and staff payroll. It pays the business's bills. It does not replace your personal paycheck.
Covered expenses are defined in each policy, so read that list before you buy.
When the owner is the revenue, an illness or injury can stop income long before it stops expenses. Rent is still due on the first. Payroll still runs. A line of credit can bridge a few weeks, but it adds debt at the moment cash is thinnest.
The Business Financial Resilience Diagnostic (BFRD) asks about this directly: does the business carry BOE coverage, or a credit line, that would cover fixed costs for 90 days or more without revenue?
- Pays you, to cover personal living costs
- Sized to your income
- Protects the household
- Reimburses covered business expenses
- Sized to your fixed-cost list
- Protects the business, so there is still a business to return to
Business protection gets confused because three different policies sound alike. They are separate instruments.
- Business overhead expense: keeps the doors open by covering fixed expenses while the owner is disabled.
- Key-person disability: pays the company when someone it depends on cannot work. See key-person disability insurance.
- Buy-sell funding: pays for the purchase of a disabled or deceased owner's share so partners can stay in control.
BOE fits owners whose revenue depends on their own work: professional services firms such as CPA practices, law firms, architecture firms, and medical practices, plus growth-stage companies carrying rent and payroll, and founders with a team to pay.
- Which expenses does the policy cover, and which are excluded?
- How long is the waiting period before benefits start?
- How long can benefits last?
- Does it reimburse expenses you actually incur, or pay a flat amount?
- How does the policy define disability for an owner who runs the business?
Ask your CPA how premiums and benefits are treated for tax. APB does not give tax advice.
Peter Boglo is an independent insurance specialist licensed in New York, New Jersey, Maryland, and Texas. BOE is one of the business protection lines he places with full independent market access, so the policy fits your business rather than one company's product shelf. He holds insurance licenses only and sells no securities products.
Related: business overhead expense insurance, key-person disability insurance, and the Business Financial Resilience Diagnostic (BFRD).
Not sure whether your fixed costs are covered? The Business Financial Resilience Diagnostic (BFRD) is a free 60-minute assessment that shows it. The household Financial Resilience Diagnostic (FRD) takes 45 minutes.