Covered expenses

A Business Overhead Expense Plan is a necessity for any business whose survival depends on its owner to stay productive. The plan covers monthly expenses if a businessowner or professional practitioner is disabled. Typically, these expenses include:

• Rent


• Employee wages and benefits


• Utilities (water, heat, electricity)


• Telephone


• Mortgage interest


• Mortgage principal or property depreciation


• Other loan principal


• Other interest


• Equipment loan interest


• Equipment loan principal or equipment depreciation


• Property taxes


• Equipment rental


• Insurance


• Business laundry


• Membership dues


• Association and other fees


• Journal subscriptions

Insurance companies often count either principal and interest or depreciation and interest as legitimate overhead expenses. Which of these expenses your client chooses to use in qualifying for overhead expense depends on:

• The structure of the business debt; and


• The current and future depreciation deduction the business is taking.

Exactly which approach is preferable depends on the age of the asset and the age of any financing. Knowing the accounting details will help in placing BOE coverage now, and it will help you later when exploring a businessowner's other insurance needs, including salary continuation and buy-sell.

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