The Hidden Cost of Recovery: How BOE Protects Your Investment

What is Business Overhead Expense (BOE)? BOE is a type of disability insurance specifically for business owners. It is designed to reimburse an owner's practice for fixed expenses associated with the business if the owner becomes disabled. It is very important to know that BOE insurance does not replace your personal disability income. These policies are designed to help keep the business afloat while you recover. If you have a personal disability insurance policy and own a practice, it is very important that you get a BOE policy in place. If you own a business and just have a personal disability policy in place, then you’re going to have to dip into your personal benefit to help keep the business afloat while you’re out of work. Having the two policies in place allows you to keep your business and personal benefit income separate.

As a dental practice owner, you are solely responsible for keeping your business running. So, if you become injured and are unable to work, your income might stop but the operating costs of your practice will continue. This is where BOE insurance becomes a very important piece of financial and practice management strategy.

What expenses does BOE typically cover?

Employee Salaries: Wages, payroll taxes, benefits for your staff
Rent or Mortgage Payments: The cost of your office space
Utilities and Maintenance: Electric, gas, water, internet, phone services
Insurance Premiums: Malpractice, general liability, property insurance
Professional services: Accounting, legal and billing services
Lease Payments: dental chairs, x-ray machines

Features and Things to consider:

Monthly Benefit - Determining the benefit amount is one of the first steps for getting BOE. The monthly benefit amount should match or slightly exceed the average monthly eligible expenses.

Increase Options - Increase riders are extremely important to have in these policies for a couple of reasons.

One, if you’re just starting your business you may not want to pay for a large benefit of BOE up front so, you are able to get a smaller benefit to lock your health and rates and then increase the benefit later on when the practice is doing well.

Two, As your business starts to grow so will your expenses and it is important to make sure you increase your BOE to properly cover you throughout the years.

Tax Deductible - The premiums you pay on BOE insurance are generally tax-deductible as a business expense.

In some cases, a Business Overhead Expense policy may be required when obtaining a loan but whether it’s required or not, it is a policy that every owner should have. When you get Business Overhead Expense insurance, you are implementing a safe guard for your practice, protecting your staff, and protecting your financial future against any unexpected accidents.

Written by: Michael Dougherty

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