What Overhead Expense Insurance Covers
Business overhead expense (BOE) insurance reimburses the fixed costs of operating your practice or business during a disability. Unlike personal disability insurance that replaces your income, BOE coverage pays the bills that keep your business alive while you recover — ensuring you have a practice to return to.
Covered expenses typically include: office or clinic rent/mortgage, employee salaries and benefits, utilities and maintenance, professional dues and licensing fees, equipment leases, business loan payments, accounting and legal fees, and insurance premiums. The total monthly benefit is based on your actual fixed overhead, typically ranging from $5,000 to $25,000 per month for professional practices.
Why BOE Is Critical for Practice Owners
| Practice Type | Typical Monthly Overhead | Months to Forced Closure Without BOE |
|---|---|---|
| Solo dental practice | $15,000-$30,000 | 3-6 months |
| Medical clinic (solo) | $10,000-$25,000 | 3-6 months |
| Law firm (small) | $8,000-$20,000 | 4-8 months |
| Engineering consultancy | $5,000-$15,000 | 4-8 months |
Tax Treatment
BOE premiums are tax-deductible as a business expense when the corporation or business pays them. Benefits received are taxable as business income — but since they are used to pay deductible business expenses, the net tax impact is neutral. This makes BOE insurance effectively free from a tax perspective, as the deductible premium reduces corporate tax while the taxable benefit is offset by deductible expenses.
Integration with Personal Disability
BOE insurance works alongside your personal disability insurance to provide complete protection. Personal disability replaces your take-home income; BOE keeps the business running. Together, they ensure that a disability does not force you to choose between personal expenses and business survival. For physicians and dentists with significant practice overhead, both coverages are essential.