Story at-a-glance
- BOE insurance protects your practice, not your personal income. It pays rent, payroll, and other business expenses if you’re disabled and can’t work.
- Covered expenses include: rent, staff salaries, utilities, malpractice insurance, office supplies, and more—keeping your doors open while you recover.
- BOE is different from personal disability insurance: it has shorter benefit periods (usually 2 years), only reimburses actual expenses, and benefits are taxable—but premiums are deductible.
- Buy early while you’re healthy to lock in low rates and secure future coverage increases without new medical exams.
- Ideal for small practices or solo physicians who drive the revenue—BOE insurance gives your business time to survive, adjust, or wind down on your terms.
What would happen to the practice of a physician or dentist who is unable to work for an extended period of time due to an injury or illness? How would rent, payroll and other expenses be paid if the person who drives the practice income is unable to produce? Personal disability insurance protects a physician’s personal income, but what protects his or her medical practice?
The solution is a Business Overhead Expense (“BOE”) disability policy. It covers the ongoing operating expenses of your practice and ensures that you do not have to use personal assets to pay for business expenses if you become disabled. It pays a monthly benefit to keep the practice afloat so that you can recover.
Overhead Expenses Covered by Business Overhead Expense
- Rent or Mortgage Payments
- Employee Salaries and Benefits
- Utility Bills
- Property Taxes
- Accounting Fees, Legal Fees, and Professional Dues
- Malpractice and Other Business Insurance Premiums
- Maintenance and Janitorial Services
- Depreciation
- Interest on Business Debts
- Office Supplies
- Other Fixed Expenses that are Ordinary, Necessary, and Tax Deductible
Some policies even cover the salary of a temporary employee hired to do the duties of the disabled. Income taxes, the cost of inventory, and the cost of furniture are a few expenses that are not covered.
Business Overhead Expense Insurance vs. Personal Disability Insurance
- Benefit Periods – Usually, BOE insurance policies have short benefit periods that do not exceed two years. Remember that BOE insurance is not protecting your ability to generate income—that is what a personal disability policy does. Instead, BOE insurance allows you to keep your practice open, or at least pay for its expenses until you recover. In the case of a long-term disability, it offers you up to two years to make a business decision, such as whether to shut down or liquidate your practice, without worrying about accruing debt from business expenses.
- Maximum Benefits – Personal disability insurance pays a monthly benefit as defined in the policy. BOE insurance policies offer a maximum monthly benefit, but only pay the actual overhead expenses if they are less than the maximum benefit. For example, if the maximum monthly benefit is $1,000 but actual business overhead expenses are only $600, the benefit paid is $600. With some insurers, that unused $400 benefit can be applied to increase future monthly maximums or to extend the benefit period.
- Taxation – As long as premiums for personal disability insurance are paid with after-tax dollars, the benefits are tax-free. business overhead expense policy benefits are subject to income tax, but the premiums are tax deductible as a business expense.
One similarity that BOE insurance and personal disability insurance policies share is that the sooner you purchase a policy, the better. Not only will you get lower rates when you are younger and generally in better health, but additional coverage can be purchased later without providing further evidence of medical insurability.
BOE insurance is a great idea for small practices with several physicians or dentists. If one physician is disabled, their portion of business overhead expenses will be covered by the policy so the other physicians are still able to practice without an extra financial burden.
A practice that relies on a small number of people (or one person) to produce revenue is economically vulnerable if one of those individuals becomes disabled. Business overhead expense insurance ensures that your practice has the necessary income to stay afloat during what would most certainly be a very difficult period. Other information sources include dental student disability insurance.
Frequently Asked Questions
What is Business Overhead Expense (BOE) insurance?
BOE insurance covers your medical or dental practice’s monthly expenses—like rent, payroll, and utilities—if you're unable to work due to a disability. It keeps the business running while you recover.
How is BOE insurance different from personal disability insurance?
Personal disability insurance replaces your income. BOE insurance pays for your practice’s fixed expenses. BOE policies usually have short benefit periods (up to 2 years) and only pay for actual business expenses.
What expenses are covered by BOE insurance?
Typical covered expenses include rent, employee salaries, utilities, malpractice premiums, office supplies, professional dues, and business loan interest. It does not cover income tax, inventory, or furniture purchases.
Are BOE insurance benefits taxable?
Yes. Benefits from BOE policies are taxable income. However, the premiums are tax-deductible as a business expense.
Who should consider BOE insurance?
Physicians and dentists who own or co-own a practice, especially in small or solo practices, should consider BOE insurance. It ensures the practice survives during a disability and avoids financial collapse.
Ready to protect your future?
Get a personalized side-by-side policy comparison of the leading disability insurance companies from an independent insurance broker.
