Across the industry, between only two to four percent of Income Protection policies are sold with Business (Overheads) Expense insurance. Even conservative estimates suggest these figures are a long way short of where they should be, highlighting a significant protection gap.Originally designed for self-employed tradesmen and professionals, the aim of Business (Overheads) Expense Insurance is to provide the funds to cover ongoing fixed costs if the business owner is injured or becomes disabled.These are costs that can’t be ‘turned off’ in the short term and typically includes lease payments on vehicles and equipment, rent of the business premises, and wages of support staff.
Essentially Business (Overheads) Expense Insurance ensures that, in the short term, the doors of the business can be kept open – preventing liquidation as a result of not being able to meet cost commitments. This in turn means the business owner has a business to return to once they’ve recovered from their illness or injury.
Business (Overheads) Expense Insurance also ensures that, while on claim, none of the policyholder’s income protection benefits have to be used to cover their ongoing business expenses. This provides additional protection for their earnings and lifestyle.
Claims experience shows that two out of three individuals return to work within twelve months of becoming ill or disabled. Positioning Business Expense cover as “business continuation cover’ or an extension of their ‘business interruption cover’ for events not covered by their general insurance policy usually provides peace of mind.