Keeping Your Business Doors Open: Understanding Business Overhead Expense (BOE) Disability Insurance

As a small business owner in Texas, you protect your personal income with individual disability insurance. However, if you become too sick or injured to work, your business expenses, such as rent, employee salaries, and utilities, continue to accumulate. Business Overhead Expense (BOE) Disability Insurance helps cover these costs during your absence. At Rollo Insurance, we’re here to help Texas business owners safeguard their hard work and ensure their company can keep running, even when they can’t.

What is Business Overhead Expense (BOE) Disability Insurance?

Business Overhead Expense (BOE) disability insurance is a special type of coverage designed to reimburse your business for its ongoing fixed operating costs if you, the owner, become disabled due to an illness or injury and can’t work.

It’s designed for businesses that heavily rely on a small number of key people (often just the owner) to bring in revenue. The goal of a BOE policy is to “buy time” – giving you space to recover or to make long-term decisions about your business without the added stress of unpaid bills forcing you to close.

Who Needs Business Overhead Expense Disability Insurance?

BOE insurance is crucial for small to medium-sized business owners in Texas, especially those whose absence would significantly impact the company’s ability to operate and generate income. This includes:

• Sole Proprietors: If you’re the main person earning money for your business (e.g., a doctor, dentist, lawyer, consultant, accountant, therapist, photographer, or chiropractor).
• Partners in small practices: When the absence of one partner creates a substantial burden on the others.
• Businesses with high fixed costs: If you have regular expenses like rent, employee salaries, and equipment leases that continue even if you’re not working.
• Any owner whose personal disability insurance wouldn’t cover business bills: Your individual disability policy replaces your personal income, not your business’s expenses.

If your business could easily run normally without you for an extended period, you might not need BOE. But for most small business owners, their presence is key to revenue.

What Does Business Overhead Expense Insurance Cover?

BOE insurance policies reimburse your business for many of its routine, fixed operating expenses. These are typically expenses that are tax-deductible for your business. Common covered expenses include:

• Rent or Mortgage Payments
• Utilities
• Employee Salaries and Payroll Taxes 
• Equipment Lease Payments
• Insurance Premiums
• Accounting and Legal Fees
• Professional Dues and Subscriptions
• Maintenance and Janitorial Services
• Office Supplies and Postage
• Interest on Business Debts
• Salary for a Temporary Replacement

What Does BOE Insurance NOT Cover?

It’s important to know the limits of BOE insurance and that it does not cover:

• Your Personal Salary or Income
• Salaries of Owners/Partners
• Salaries of Family Members Hired After Disability
• Cost of Goods Sold or Inventory
• Income Taxes
• Capital Purchases
• Expenses Already Covered by Another Source
• Disabilities from Illegal Acts or War

How Does Business Overhead Expense Disability Insurance Work?

1. You Become Disabled: You suffer a qualifying illness or injury that prevents you from performing your essential job duties.
2. Elimination Period (Waiting Period): There’s a waiting period (typically 30, 60, or 90 days) before benefits start. You choose this period when you buy the policy.
3. Benefits Begin: After the waiting period, the policy begins to reimburse your business for its actual overhead expenses, up to a monthly maximum limit you selected.
4. Reimbursement Basis: Payments are usually made monthly and only for expenses actually incurred. If your expenses are lower in one month, the unused benefit might roll over to future months (depending on the policy).
5. Benefit Period: BOE policies have relatively short benefit periods, commonly 12, 18, or 24 months. Unlike individual disability policies that can pay to age 65, BOE is a shorter-term solution to help your business bridge the gap.

Average Cost of Business Overhead Expense Disability Insurance in Texas

The cost of BOE insurance in Texas varies. It depends on:

• Your Age and Health: Younger and healthier individuals generally pay less.
• Your Occupation: Some professions are considered higher risk.
• Monthly Benefit Amount: How much you need to cover your business expenses.
• Elimination Period: A longer waiting period means lower premiums.
• Benefit Period: A longer benefit payout period means higher premiums.
• Optional Riders: Adding features can increase the cost.

For a general idea, annual premiums for BOE insurance in Texas can range from a few hundred dollars to a few thousand dollars per year, depending on the benefit level and your specific situation. For example, a $10,000 monthly benefit for a 40-year-old might cost a few hundred dollars per month, but this is just an estimate.

BOE vs. Individual Disability Insurance: Why You Need Both

This is crucial for business owners:

• Individual Disability Insurance: Pays a portion of your personal income directly to you. This money is for your household bills, mortgage, groceries, and personal living expenses.
• Business Overhead Expense (BOE) Insurance: Pays your business’s operating expenses directly to the business. This money keeps your office open, pays employees, and covers utilities.

You need both policies for complete protection. Without BOE, you’d be forced to use your personal disability benefits (or savings) to keep your business afloat, undermining your personal financial security.

Business Continuity Coverage with Rollo Insurance

For Texas business owners, an unexpected illness or injury can disrupt operations and create financial strain. Business Overhead Expense (BOE) Disability Insurance helps cover ongoing business expenses such as rent, salaries, and utilities if you’re unable to work. Rollo Insurance provides guidance to help you choose the right coverage to maintain operations during your absence. Contact us today to schedule a consultation and explore your options.