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Business expenses insurance is a form of income protection and, subject to the policy document, will provide reimbursement of the regular fixed operating expenses of a business if the insured is unable to work due to illness or injury. Sometimes also referred to as business overheads cover, it is specifically designed for self-employed people who have a major role in a business or company.

The fixed costs of a business generally continue when a self-employed owner or director is injured or ill and finds themselves no longer able to work. Business expenses insurance will reimburse fixed overheads which may assist the business to continue operating, and if the owner or director is unable to return to work, ensure that there is still a business to sell.

Expenses covered

Insurance contracts will vary, so it is important to read the product disclosure statement to understand exactly what a particular business expenses insurance policy covers, and exactly what is defined as an eligible business expense. Moreover, it is important to note any exclusions, limitations and benefit offsets as described in the policy document that will affect the cover and benefits provided under business expenses insurance.

Business expenses insurance will typically cover up to 100% of eligible regular business overheads such as accounting and audit fees, rent, membership fees, plant and equipment leasing costs, interest on business loans and and business related insurance premiums.

Benefit and waiting period benefit

As with income protection insurance, benefit and waiting periods also apply to business overheads cover. The benefit period on is normally restricted to a maximum of 12 months, and this is to provide the insured with time to determine whether they will be able to return to work. The waiting period, which determines the length of time after the illness or injury until the insurance commences reimbursing business expenses, can normally be set as 14 days or a month.

Regular reviews

Some policies will have an option that allows the insured benefit to be automatically increased in line with increases in the Consumer Price Index, making sure that the cover does not fall behind the rising cost of living. As with other forms of life insurance, it is important to perform regular reviews to ensure the level of business expenses protection is still appropriate with the changing needs of a business.