Business Overhead Expense Insurance Calculator

If you own a practice and can't work because of an illness or injury, your expenses keep coming: rent, staff payroll, loan payments. Personal disability insurance replaces your own income, but it isn't designed to keep the practice open. Business overhead expense (BOE) insurance is. This calculator estimates the monthly benefit to consider and how much cash you'd need before coverage starts.

What this calculator does

Enter your practice's monthly fixed expenses (rent, staff, loan and equipment payments, utilities and software, and other fixed costs), any revenue that would continue without you, the benefit period and the waiting period. It shows:

• the monthly BOE benefit to consider,
• your covered fixed expenses per month,
• the maximum total benefit over the period, and
• the cash you'd need to cover the waiting period.

The formula in plain English

Covered expenses = rent + staff + loan payments + utilities and software + other fixed costs.

Monthly benefit = covered expenses − revenue that would continue without you.

Many owners leave continuing revenue at zero, because associate or hygiene production often drops when the owner is out.

Maximum total benefit = monthly benefit × benefit period in months.

Cash for the waiting period = covered expenses × waiting days ÷ 30.

A worked example

Dr. Carter owns a general practice. Each month she pays $7,500 in rent, $32,000 in staff wages and benefits, $9,000 in loan and equipment payments, $2,800 in utilities and software, and $3,200 in other fixed costs.

• Covered expenses: $54,500 a month.
• Monthly BOE benefit: $54,500, if she assumes no continuing revenue.
• With a 12-month benefit period, the maximum benefit is $654,000.
• With a 30-day waiting period, she'd need about $54,500 in cash to cover the first month.

If she has an associate who could keep producing and covering $15,000 a month after costs, she might choose a lower benefit of about $39,500, though many owners keep the higher amount for safety.

Why it matters at each career stage

If you're: Practice owner

Review your BOE coverage when your expenses change: a new hire, a bigger office or a new loan. Coverage that was right five years ago may now leave a gap. Pair it with personal disability insurance and, if you have partners, disability buyout coverage.

If you're: Employed

If you're about to buy or start a practice, add BOE to your planning. Lenders may require disability coverage, and BOE protects the investment you're making.

Choosing a policy

Match the benefit to your real expenses. Use your profit and loss statement, not estimates.

Check how benefits are paid. Most policies reimburse actual expenses up to the monthly limit; unused amounts may extend the benefit period.

Look at the definition of disability. Some policies cover partial disability, which is important for dentists and surgeons who might be able to work only part-time.

Consider future increases. Some policies let you raise coverage as the practice grows without new medical exams.

Compare quotes. Work with an independent agent who knows healthcare practices.

Thinking about the worst case

It's not pleasant to plan for being unable to work, but for a practice owner it protects more than income. It protects staff jobs, patients' care and the value of a practice you've spent years building. A few months without coverage can force a rushed sale at a low price.

Next, check your personal coverage with the disability insurance calculator, build a cash reserve with the emergency fund calculator, and read our guide to disability insurance.