What happens to your business and employees if you become disabled or something interrupts operations? Hopefully, you have group or individual disability income insurance to replace your income. But what about ongoing business expenses? That’s where business overhead and business interruption insurance come in.

Business overhead insurance pays some or most of the following:

Mortgage interest (but probably not principal or insurance portions).

Lease payments, including rent and payments on business automobiles, furniture and hardware.

Services,  including maintenance and repair.

Employee wages (but maybe not contractor payments).

Utilities (those essential to running the business, so possibly not cable or satellite television, for example).

Dues and fees for professional memberships, continuing education and license renewals.

Business-related property taxes.

Fees paid to providers of professional services.

Business insurance premiums (this is important since you want to keep your employees’ medical insurance payments going and your business owner liability, property, casualty, malpractice, disability and other insurance in force).

Business overhead insurance integrates with disability income insurance. If you don’t have personal or group disability income insurance, business overhead insurance might not be very useful. Why? Unless you want your employees to keep the business going for a few months or years and then close down or take over, you must replace your income when you’re disabled. It’s the business owner’s disability that triggers business overhead insurance benefits.

The salaries of owners and officers are almost never covered by business overhead insurance. That’s what individual or group disability income insurance is for. While the business overhead insurance policy might cover disability income insurance premiums paid by the business, it probably won’t pay your personal policy if you or someone else owns and pays for the policy.

These policies almost always have a waiting — or elimination — period before benefits start, and benefits are normally paid in arrears. You need to figure a 14- to 90-day waiting period for benefits and 30-day lag for payments made in arrears.

Business interruption (or income) insurance provides benefits when a physical or logistical event causes a reduction or elimination in your income stream.  Business interruption or income insurance can help replace lost income if you’re temporarily closed after a covered loss, such as property damage.

What sort of losses are covered? Consider the situation in which an out-of-control van slams into your plate glass window, damaging contents inside your office, store or restaurant. While your property insurance normally covers physical damage, it does not cover the loss of income resulting from having to close for repairs or restoration.

Another example is loss of income due to the actions of a civil or government entity. If your street is being replaced and traffic is routed away from your business, you might not be able to open or could experience a significant drop in income. Only a business interruption or income insurance policy might replace some or all of your lost income.

Disclaimer: The features, coverages, exclusions and benefits of insurance policies vary greatly. Consult a licensed property and casualty insurance professional who specializes in the business insurance market before purchasing business insurance.