Running a small business means learning about all different types of insurance. Read on to gain knowledge on which types are right for your small business.
Running a small business means learning about all different types of insurance. You’ve got to figure out about the different insurances you need for yourself (like health, disability, and the various types of life insurance) and what you can afford to offer to your employees (health, vision, and dental, different types of life insurance, and other voluntary benefits like pet insurance or identity theft protection). But you’ve also got to learn about the insurance types that are available for and important to your actual business, like liability insurance for accidents or renters insurance for your leased property. One that might be new to you is business overhead expense insurance, which sort of straddles the line between business insurance and personal insurance. In essence, it is insurance for your business in case something happens to you personally. Read on to learn more about it and decide if it’s right for your small business.
What Is Business Overhead Expense Insurance?
Business Overhead Expense (BOE) insurance is a policy that covers the operating costs of your business if you become disabled and cannot work.
How Is It Different Than Disability Insurance?
BOE is very similar to disability insurance, since it only pays out if you are disabled and cannot work. The main difference is that disability insurance is personal – it is designed to cover some of your personal expenses. It is not designed to keep a business afloat. In some cases, the business will continue just fine without you actively working, but for most small businesses, this isn’t true. From a landscaping business to a small café, if you’re not in there working, things aren’t getting done. BOE is there to cover operating costs so that your business survives your short term disability.
How Does It Work?
BOE is limited to established small businesses (usually there is a revenue threshold and a minimum number of years in business) and owners between 18 and 60 or 64. If you, the owner, become disabled and cannot work (this will be defined by the policy), the insurance benefit will pay out over the benefit period (usually 12, 18, or 24 months). The benefit can be used to pay wages, debts, office expenses, dues or fees, and other insurance premiums. In some cases, unused benefits can roll over to the next month to cover variations in costs.
What Won’t It Cover?
BOE insurance cannot be used to cover your own wages or the profits that you usually draw from your business. It also cannot be used to make new improvements to your office space or to pay relatives who were not already employed by your company for at least 60 days prior to your disability. Finally, BOE insurance can’t pay for any expenses that are covered by another income source – like passthrough taxes that are passed on to your customers.
Partner with Malden Solutions Today
Malden Solutions has a wealth of expertise in providing employer insurance solutions, HR solutions, and individual insurance solutions to businesses both big and small. Our team of seasoned professionals can help you navigate the rapidly-changing world of insurance with ease. We partner with businesses and individuals throughout the country to provide our dedicated services for employee benefits but also work within our surrounding communities in Maryland, Northern Virginia, and Washington, D.C. Contact us today to learn more about how we can provide effective, dynamic solutions for your business. Stay connected with us on Twitter, Facebook, and Linkedin.