What Is Business Overhead Expense Insurance?

As a dental professional, you spend years learning, studying, and practicing dentistry — and that’s even before you’ve decided to open your own practice. Your hard work and success deserves to be protected and an important part of that protection is ensuring your practice and related expenses are covered in the face of uncertainty. 

If you own or are contemplating starting a dental practice, business overhead expense insurance is a crucial policy that can provide you with fiscal security in certain situations. This policy is designed to cover fixed business expenses, such as staff salaries, utilities, and office leases, if you’re unable to work due to a disability.

How Does Overhead Expense Insurance Work? 

Business overhead expense policies  pay benefits on a reimbursement basis. In the event of a claim, the payment that you will receive is based on your actual expenses incurred. For example, if you have a $10,000 per month overhead expense policy and your eligible expenses total only $9,000 in that month, the insurance company will reimburse you $9,000.  Some policies, however, may allow any unused benefit to continue past the stated benefit period or be used in future months.

What Can Business Overhead Expense Insurance Cover? 

While disability income insurance can supplement your personal income and business loan protection insurance can ensure your business loan payments are made, you may still be left with bills to cover your practice’s expenses. 

Business overhead expense insurance may reimburse you for ongoing expenses associated with running a practice. Covered expenses may include:

• Staff salaries. Your team members rely on your practice for income, so in a time when you are unable to work, using this insurance policy to cover their salaries helps them (and you) get through a difficult time. 

• Utilities. By keeping the electricity, water, and other utilities running at your practice, your other team members can continue to see patients and maintain day-to-day business operations. 

• Some business insurance premiums. You may have monthly premiums for other insurance policies that will still need to be paid during this time. Business overhead coverage can help you make these payments and maintain financial stability. 

• Professional dues and subscriptions. As a dental professional, you’ll likely have to pay monthly or annual fees for business subscriptions and dues to professional organizations.

• Property taxes. In some cases, you may be required to pay property taxes for your owned or rented property, which may be covered by business overhead expense insurance. 

• Accounting and legal fees. To keep the business side of your dental practice in good condition, you will likely spend time working with an accountant and lawyer. 

• Rent or mortgage. Whether or not you own your property, you will likely owe a monthly rent or mortgage payment. 

• Interest payment on business premises or equipment. With larger expenses, such as equipment, you may owe monthly interest payments while you pay off the full purchase amount. 

• Principal or depreciation on business premises or equipment.

What Are Common Policy Details? 

Most business overhead expense contracts allow you to select, at the time of purchase, an elimination period or 30, 60, or 90 days.  The maximum benefit period is typically 12 months, 18 months, or 24 months.

While every policy should be centered around your specific needs, many people find a 30-day waiting period to be most efficient, so the first payments can be made in a timely manner. 

In addition, a 12-month benefit period is often sufficient, as many practitioners would resume working, sell their practice, or liquidate their assets within one year. 

Use the Right Insurance Coverage To Protect Your Dental Practice

In summary, business overhead insurance is designed to cover fixed business expenses that can’t wait until you recover or sell the business. The coverage details, however, should be tailored to your specific needs. 

By working with an insurance professional who is familiar with the specific needs of dentists, you can ensure your practice and career are safeguarded against any unforeseen circumstances that may arise. Contact us today to learn more about business overhead expense insurance and how it can benefit your practice! 

About Treloar & Heisel 

Treloar & Heisel offers dental and medical professionals a comprehensive suite of financial products and services ranging from business and personal insurance to wealth management. We are proud to assist thousands of clients from residency to practice and through retirement. Our experienced teams deliver custom-tailored advice through an active local presence, while our strong national network ensures that clients experience the same high level of service throughout the country.