In my practice, I’ve had the occasion to prosecute claims against insurance carriers for disability policies related to Business Overhead Expenses (BOE). First, these policies are private plans, not group plans, meaning the federal oversight statute known as ERISA does not apply. Two important points worth mentioning is that because ERISA doesn’t cover BOE benefits, the claims are litigated in state courts and the deadlines imposed by the carriers can be extremely short.

Second, BOE benefits are usually purchased by small to mid-sized business owners as extra protection should the owner become sick or injured and not be able to continue working. Unlike disability insurance which generally computes your benefit amount based on your previous income (66.66% is standard), BOE benefits are calculated based on the overhead expenses incurred by the owner’s business. Each BOE policy defines the overhead expenses a little differently, but the usually cover rent, utilities, payroll, supplies, equipment maintenance, and some insurance premiums.

BOE benefits usually last only for a short period time: somewhere in the range of 2 to 5 years. Standard disability insurance will run to age 65 in most cases, assuming one can continue to prove they are disabled.

The nexus of course, between disability insurance and BOE benefits, is that the benefit is only paid if one can continue to prove to the carrier that they are disabled under the typical definition of disability set forth by that policy. As many business owners are aware, so much of the success of the business depends on the energy, creativity and know-how of the owner. BOE benefits help that business keep running while the disabled owner can either medically recover and get back to work, or develop long term strategies to maintain a viable company if the disability ends up being permanent.

Please contact me if you are a business owner and you are considering buying BOE insurance, you’ve already purchased it and have questions, or you need to put in a claim based on your disability. Because BOE benefits are almost always larger in value, we see insurance carriers evaluating claims very strictly, typically requiring a detailed financial exam by the carrier’s CPA.  Feel free to contact me with any questions.

Peter Casciano

(240) 240-2872

peter@cascianolawgroup.com