Business Overhead Expense Insurance: What You Need to Know

Insurance is expensive, and costs for various types of coverage seem to increase drastically every year. If you run a business, the different types of coverage to consider can be overwhelming. Some business owners probably purchase more coverage than they need, but many others end up with gaps that can leave them woefully unprotected in the event of an emergency.

One type of insurance often overlooked is business overhead expense (BOE) coverage. Understanding what this insurance covers can help business owners ensure that they have the protection they need in their particular circumstances. Of course, even when a business owner purchases the right insurance, they can still suffer unplanned losses when the insurance company refuses to live up to obligations under the policy. If that happens, we invite you to contact our team to learn how we can assist. Sometimes, a simple letter from a Miami insurance coverage lawyer is enough to resolve the dispute and obtain compliance.

Business Overhead Expense Insurance is Related to Disability Insurance

All businesses have certain expenses that must be covered to keep the doors open. There are costs for providing operational space, salaries for employees, insurance premiums, utilities, and a host of other expenses that come due regularly, regardless of how well the business is operating. Business overhead expense insurance provides coverage for these costs in certain situations. Specifically, BOE coverage is designed to pay these expenses if a disability prevents an owner or key person from performing their job.

This type of coverage is helpful, and possibly essential, for businesses that rely on a particular individual’s involvement in daily operations. Professional practices that rely on a few professionals to generate revenue, for instance, may struggle to meet regular expenses if one of those professionals is out for an extended period.

Expenses Covered by BOE Insurance

As with all types of insurance, it is essential to read the policy terms in detail to understand what is covered, what is specifically excluded, and what is left ambiguous. In many cases, BOE insurance is supposed to cover the cost of expenses such as:

• Mortgage or rent payments
• Electric, gas, and other utilities
• Salaries and payroll taxes
• Property taxes
• Insurance premiums
• Cost of renting and maintaining equipment
• Accounting and legal fees
• Professional dues and licensing fees

The coverage provided is based on the expenses incurred after the elimination period. The policy typically provides coverage only after the key player has been suffering from a qualifying disability for a specified period of time. This could be 90 days or longer, but payments could start within as little as 30 days.

Understanding the Differences Between BOE and Other Types of Insurance

It is critical for business owners to understand how the scope of business operations expense insurance differs from that of disability insurance and business interruption insurance. Some business owners may need all three types of coverage, while others find that one or two policies cover their needs.

Disability Insurance

Both business overhead expense insurance and disability insurance are designed to provide support when a key player in a business is unable to perform their occupational duties due to a disability. With both types of policies, it is important to understand when a disability meets the qualification standards to take effect and the limits on benefits. But the benefits themselves are different.

BOE insurance is designed to cover the business’ professional expenses, while disability insurance provides resources to meet the policyholder’s personal needs. Benefits under a BOE policy could cover the cost of running an office or other facility, but they would not include amounts to pay the living expenses of the owner, partner, or employee who is unable to work and produce income.

The benefits under these two types of policies are calculated differently. Generally, business overhead expense insurance reimburses the business for specific expenses incurred, up to the limit of coverage. Disability insurance, on the other hand, provides benefits based on income rather than need.

Business Interruption Insurance

Business interruption insurance and business overhead expense insurance both provide protection for the business rather than its individual members. But they provide protection in different situations.

BOE insurance supports the business in the event of disability, while business interruption insurance provides resources to make up for lost income if the business cannot operate due to an event such as a fire or equipment failure, such as burst pipes. Losses from storm damage may or may not be covered, depending on the policy terms.

Business interruption insurance often provides not only amounts to cover operating expenses but also amounts to make up for lost income during the time while the business is unable to operate.

Problems with Business Overhead Expense Insurance

The insurance companies that provide BOE coverage do not like to pay claims any more than the insurers that provide other forms of coverage, such as car insurance or homeowner’s insurance.  As a practical matter, they are always looking for ways to use the fine print in the policy to justify a refusal to pay.

Sometimes the company is within its rights to deny payment, but often it is making tenuous legal claims that will not stand up to legal scrutiny. Insurers operate on the expectation that their determinations will not be challenged. When policyholders work with an experienced Miami insurance claim lawyer, they often find insurers to be much more willing to honor their policy obligations because they know they will lose if the issue is taken to court.

When Insurers Dispute Your Claim, Talk to Ver Ploeg & Marino

Denials, delays, and endless requests for documentation seem to be standard operating procedure for insurance companies in many situations. The language of insurance policies is complex and rife with industry-specific meanings that can be challenging to interpret without extensive industry experience. Companies rely on this language to avoid paying benefits, and they sometimes act in bad faith in doing so.

At Ver Ploeg & Marino, we focus our practice on the insurance industry, so we know the most effective ways to ensure policyholders receive the benefits they are entitled to under their policies. To discuss options for resolving a claim dispute, schedule a confidential consultation by calling 305-577-3996 or contacting us online.

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