What would happen to the practice of a physician who is unable to work for an extended period of time due to an injury or illness? How would rent, payroll and other expenses be paid if the person who drives the practice income is unable to produce? Personal disability insurance protects a physician’s personal income, but what protects his or her medical practice?
The solution is a business overhead expense (“BOE”) disability policy. It covers the ongoing operating expenses of your practice and ensures that you do not have to use personal assets to pay for business expenses if you become disabled. It pays a monthly benefit to keep the practice afloat so that you can recover.
The following are some business overhead expenses that are covered by BOE insurance:
Some policies even cover the salary of a temporary employee hired to do the duties of the disabled. Income taxes, the cost of inventory, and the cost of furniture are a few expenses that are not covered.
There are several key areas in which BOE insurance differs from personal disability insurance.
One similarity that BOE insurance and personal disability insurance policies share is that the sooner you purchase a policy, the better. Not only will you get lower rates when you are younger and generally in better health, but additional coverage can be purchased later without providing further evidence of medical insurability.
BOE insurance is a great idea for small practices with several physicians. If one physician is disabled, their portion of business overhead expenses will be covered by the policy so the other physicians are still able to practice without an extra financial burden.
A practice that relies on a small number of people (or one person) to produce revenue is economically vulnerable if one of those individuals becomes disabled. BOE insurance ensures that your practice has the necessary income to stay afloat during what would most certainly be a very difficult period.