Overhead Insurance

What Does Overhead Insurance Mean?

Overhead insurance (or overhead expense insurance) is a type of coverage that business owners purchase to help cover various business costs if they become disabled. It can assist in paying for expenses such as salaries, rent, utilities, and other essential operating costs during the period of disability. Because the policy only pays out when an owner cannot work, many business owners pair it with a personal disability insurance policy that replaces lost income rather than business expenses.

Insuranceopedia Explains Overhead Insurance

Business owners are often crucial to the success of their businesses. If an owner becomes disabled and is unable to work for an extended period, the business may face losses and reduced profitability. Overhead insurance helps mitigate these potential losses by providing the necessary operating capital to keep the business running in the owner’s absence, ensuring essential expenses are covered during the period of disability. Many owners carry this coverage in addition to a business owner’s policy, since a BOP covers property damage and liability claims but does not pay the operating costs that pile up while the owner is sidelined.