Glossary

Business overhead expense

Disability insurance that reimburses a disabled owner's fixed business costs, such as rent, utilities and staff salaries, while they cannot work.

Also called: BOE, business overhead expense insurance, overhead expense disability insurance

Business overhead expense (BOE) insurance is a disability policy that pays a business owner's fixed operating costs while the owner is disabled. It is aimed at professionals and small-practice owners, such as dentists, physicians, attorneys and consultants, whose revenue stops when they do while rent, staff salaries, utilities, equipment leases and loan interest keep coming.

BOE is an indemnity contract. It reimburses actual, covered overhead up to a monthly maximum, after an elimination period commonly in the range of 30 to 90 days, for a limited benefit period often 12 to 24 months. It does not replace the owner's own income, which personal disability insurance handles, and the owner's salary is generally not a covered expense. Premiums are typically deductible as a business expense and benefits taxable, but confirm the treatment with a CPA.

Do not confuse it with business income coverage, which responds to property damage. BOE responds to the owner's illness or injury, with no physical loss to the premises. Check how the policy defines total and partial disability, whether a partial or residual benefit applies as the owner returns to work, and which expenses are listed. The guide on business overhead expense insurance covers eligibility and benefit design. Pair it with key person insurance and a funded buy-sell agreement when the business cannot survive without the owner.

Last reviewed October 10, 2026

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Related terms

Key person insurance Life or disability insurance a business owns on a critical owner or employee, paid to the business to offset the financial hit of losing that person. Buy-sell agreement A contract among a business's owners that sets who can buy a departing owner's share, at what price, and how the purchase is funded. Business income Property coverage that replaces net income and continuing operating expenses, including payroll, while a covered physical loss suspends operations. Indemnity The principle that insurance restores your financial position after a loss, no better and no worse; also a contract promise to make good another's loss.

Related guides

Business overhead expense insurance: what it pays when an owner is disabled How business overhead expense (BOE) disability insurance reimburses rent, payroll and fixed costs while an owner is disabled, with tax treatment and sizing. Business succession planning and the insurance that funds it How a succession plan uses buy-sell agreements, life and disability insurance and key person coverage to transfer a closely held business smoothly. Disability buy-out insurance: funding a buy-sell when an owner is disabled How disability buy-out policies fund a buy-sell agreement when an owner is disabled, including elimination periods, trigger definitions and tax treatment. Is business insurance tax deductible? What counts and what does not Most business insurance premiums are deductible. Life insurance you benefit from, self-insurance reserves and income-replacement policies are not. Key person disability insurance: protecting the business when a leader cannot work How key person disability insurance protects a business when a leader is disabled; how it differs from overhead and buy-out coverage, and underwriting. Insurance for sole proprietors and the self-employed A sole proprietor is personally liable for the business. Which policies close that gap, what a home policy leaves out, and how to protect your own income.