Is There Disability Insurance to Cover my Business Expenses?
The importance of Business Overhead Disability Coverage
by Thomas Lloyd

Many small business owners and entrepreneurs understand the importance of protecting their own personal income but neglect to insure proper care of their business when a long term disability or sickness occurs. Sadly, many successful businesses fail when the CEO cannot work because of a long term disability and their businesses’ overhead costs accumulate past a point of financial viability. Consequently, it behooves such a person not only to seek out disability insurance for their personal income but also disability insurance for their business expenses as well. This type of coverage usually is referred to as Business Overhead Disability Insurance. Here are the basic outlines of how such a policy works

• After a determined waiting period (aka elimination period) of being totally disabled, the insured’s monthly business operating expenses are paid by their business overhead policy. Typical covered overhead expenses are:

- Rent
- Utilities
- Insurance Premiums
- Employee’s salaries
- Real Estate Taxes
- Equipment lease expenses
- Interest on Debt

• The Policyholders share of covered expenses will be reimbursed up to a maximum monthly benefit shown on the policy..
• How much money does the policy pay for? This depends on what you can verify in monthly business expenses (through a P & L statement, usually).
• What are the benefit limits? It varies with each company but typically the range starts at a minimum of $200.00 a month and goes to a maximum of $30,000.00 a month.

All overhead policies have many options to meet the needs of each individual. Most have choices of how long the insured needs to wait until the insurance company pays their first monthly benefit (just like their individual income policy).

The most common choices are 30 days, 60 days, & 90 days. These are defined as ‘waiting’ or ‘elimination’ periods.

Likewise, with benefit periods (time the benefit is paid out for a disability). There are three common selections of 12, 18, & 24 months. Unlike individual income disability policies that offer a ‘to age 65’ or ‘lifetime’ benefit, overhead disability policies max out at a two year benefit as most individuals will know whether or not their business will continue past that point.


Protection of the business expenses allow the disabled person valuable time to assess the effects of what their disability may have on the future of their business and to plan accordingly. If this is something you may have overlooked and would like more information about it, please advise your insurance agent or contact me directly for further details.

Policy Form 4100 underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield MA, a wholly owned stock subsidiary of the Guardian Life Insurance Company of America (Guardian), New York, NY. Policy form 0E102 in California and Policy Form NC82 in Montana provided by Guardian. Product provisions and features may vary from state to state.


Thomas Lloyd is a disability insurance specialist with the Guardian Disability Insurance Brokerage – an agency of the Guardian Life Insurance Company of America.