IF THE OWNER IS DISABLED: WHAT PAYS THE OVERHEAD.
BOE coverage pays the business's bills, not the owner. It reimburses expenses such as rent, utilities, insurance premiums and interest, up to the monthly maximum, after a waiting period, and for a benefit period that carriers commonly set at 12, 18 or 24 months. The owner's own pay is generally excluded, and so are income taxes and inventory. The number the policy has to cover is the monthly overhead in the books, so the overhead rate work is the sizing work. Carriers vary, so the policy wording decides what counts.
When the owner who estimates, sets the crew schedule and signs the pay applications is out, overhead does not stop. Rent, insurance, software and office payroll keep coming due, while billings fall. This page explains what BOE coverage pays in plain terms, how it differs from personal disability and key person coverage, how to size it from the books, and how the tax treatment works. A licensed insurance broker places the coverage, and SPM does not sell it.
WHAT IT MEANS.
Business overhead expense coverage, also called BOE or overhead expense disability insurance, is a policy that reimburses a business for its fixed overhead expenses, up to a monthly maximum and for a limited period, while the owner is disabled by injury or sickness.
This page is about the cash side only. It does not say whether to buy the coverage, which carrier to use or how much it costs, because premiums depend on the owner's age, health, occupation, waiting period and benefit period and the broker quotes them. What SPM can do is give the broker an accurate monthly overhead number, which is the one input the owner can get wrong.
Policy wording, tax rules and state law differ. Treat this page as how the money works and confirm the details with the broker for the policy and with a tax professional for the tax.
WHAT THE COVERAGE PAYS AND WHAT IT DOES NOT.
It pays overhead, not the owner
BOE coverage reimburses the business for its routine overhead while the owner is disabled. It is not income replacement. The owner's own salary or draw is generally excluded, and so is the salary of anyone hired to do the owner's duties, unless the policy has a rider for that. A contractor who wants the owner's paycheck protected is looking at personal disability coverage, which is a different policy.
What is typically covered
Carriers vary, and the policy wording lists what counts. Commonly listed items are rent or mortgage payments, interest on business loans, utilities and telephone, accounting and legal fees, and insurance premiums. Many policies also include employee benefits. Whether office wages, vehicle payments or equipment payments are covered depends on how the policy defines overhead, so the owner asks the broker to point to the definition in writing before relying on any line.
What is typically not covered
Income taxes and inventory are commonly excluded, along with the owner's pay. The cost of a temporary replacement is excluded unless a rider adds it. Direct job costs such as materials, field labor and subcontractors are not overhead, and a policy written around overhead is not built to pay them. Those costs rise and fall with the work, which is the reason the overhead rate leaves them out.
Reimbursement and the monthly maximum
The policy pays the expenses the business incurs, up to the monthly maximum, so a month with $18,000 of covered expenses and a $24,000 maximum pays $18,000. The business keeps records of what it paid, because the insurer asks for proof. A contractor whose overhead is mixed into job cost or paid out of the owner's personal account has a hard time proving a claim, and has a hard time sizing the policy in the first place.
The waiting period and the benefit period
The waiting period, also called the elimination period, is the time between the start of the disability and the start of benefit payments. Common choices are 30, 60 or 90 days, and a longer wait is the more common way to lower the premium. The benefit period is the longest time payments continue. For BOE coverage it is short, commonly 12, 18 or 24 months and generally not more than two years. The business pays its own overhead through the waiting period, so the cash for those months has to exist.
How it differs from personal disability and key person coverage
Personal disability coverage replaces part of the owner's income and is aimed at the household. Key person coverage is bought by the business on someone whose loss would hurt it, and it is covered on its own page. BOE coverage is aimed at the fixed bills in between: it keeps the lights on and the office payroll funded while the owner recovers. A contractor can have none, one or all three, and each answers a different question.
WHAT IT LOOKS LIKE IN DOLLARS.
The overhead rate page uses $420,000 of annual overhead on $3,000,000 of revenue, a 14 percent rate. Divide by 12 and the books show $35,000 of overhead a month. That list includes owner pay at market rate, and BOE coverage generally does not pay it. Suppose the owner's line is $11,000 a month. That leaves $24,000 a month of business overhead for the policy to consider.
Say $3,500 of that $24,000 is vehicle and equipment payments, and the policy wording does not list them. The monthly benefit to ask the broker about is then $20,500. With a 12 month benefit period the most the policy could pay is $246,000. With a 24 month period it is $492,000. All of these inputs are invented round numbers. The contractor's own numbers come from the books.
With a 60 day waiting period the business pays about two months of overhead from its own cash before the first benefit. On this example that is $70,000 of overhead, or $48,000 if the owner's pay is not taken during the wait. Premiums are an overhead line too. Once the broker quotes one, it goes into the overhead list and nudges the rate up a little. The rate is the cost of having the coverage, and the benefit is what it buys.
WHAT WE CHANGE.
SPM builds the overhead list from the last 12 months of the books, using the same method as the overhead rate page, and splits it by line: rent, utilities, office payroll, insurance, software, professional fees, vehicles and loan interest. The owner's pay is shown on its own line so the broker can see what is in the policy and what is out. The broker and the carrier decide what counts, and the owner has the full list to compare against the policy definition.
The overhead rate is a yearly average, and the policy pays by month. SPM checks the busiest and slowest months, so the monthly maximum comes from a typical quarter and not a quiet one. If overhead grows, the maximum is compared with the new number at each renewal, because a policy sized to last year's costs pays last year's bills.
SPM puts the waiting period into the cash forecast: the months of overhead the business pays before benefits start, with open pay applications, retainage and payables laid out against them. If the cash is short, the choice is a shorter waiting period, a line of credit or a smaller owner draw, and the numbers make that choice plain. See the labor burden and cost per employee pages for the people side of that overhead.
Overhead is coded to overhead accounts, not to a job and not to the owner's personal card. SPM reports it monthly so there is a clean record of what the business paid in any month. The tax treatment is a question for a tax professional: premiums for overhead expense coverage are generally deductible and benefits generally taxable, and the owner confirms both before any claim.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
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