What You Should Know About Business Overhead Policies

According to the U.S. Census Bureau, approximately one in five Americans will experience a disability that prevents them from working for at least six months. 30% of workers between the ages of 35 and 65 will suffer a disability for up to 90 days; and one-fifth of that age group will be disabled for five years or more. Given these statistics, it is not surprising that most business owners and professionals with their own practices believe that purchasing a Business Overhead Policy is a necessity. For the most part, they are correct.

Business Overhead Policies pay a monthly benefit to cover expenses if the business owner is unable to work due to disability. These can include rent or mortgage, salaries, office equipment and supplies, malpractice insurance, and utilities, among other expenses. The assumption is that by purchasing a Business Overhead Policy you will protect your business and will be able to meet your monthly business obligations. That way your business still will be there when you recover; or, if you don't get better, you still will have something worth selling.

Although policies differ depending upon the coverage you purchase and the insurance company you purchase from, as with other insurance claims, most insurance companies are not anxious to pay out the benefits you've paid for, even when your disability is obvious. Also, keep in mind that Business Overhead Policies were not created to keep your business running without you forever. Rather, they were created to help you meet your monthly expenses during the time of your disability and/or until you are able to sell your business or practice. Think of a Business Overhead Policy as a temporary safety net and nothing more; a necessity but not a panacea. If you are permanently disabled and cannot run your business or practice, a Business Overhead Policy will not solve all of your problems.

And, just because you have purchased a Business Overhead Policy does not necessarily mean you will receive the maximum allowed by that policy every month. For example, if you purchased a policy that pays up to $20,000 a month, and your expenses for one month are only $15,000, the insurance carrier will only pay you $15,000. On the other hand, if the next month your expenses are $35,000, the insurance carrier will only pay you the maximum allowed in your policy - $20,000.

For the professional or business owner, Business Overhead Policies are an essential part of life. However, be aware of their limitations, select your policy carefully, and consult with a disability attorney or financial expert before making a final decision or filing a claim.

For a free consultation, you can contact DeHaan Busse LLP at: info@dehaanbusse.com