Health Insurance Mastery Practice Exam

What does a business overhead expense policy typically cover?

1. Owner's personal salary

2. Employees' salaries

3. Utilities and rent costs

4. Equipment lease payments

The correct answer is: Owner's personal salary

A business overhead expense policy is designed to cover certain ongoing operational costs that a business incurs during a period when the owner is unable to work due to disability or illness. This type of insurance is focused on covering the fixed expenses that are necessary to keep the business running, even in the owner's absence. In this context, covering the owner’s personal salary is not typically included in a business overhead expense policy because the policy is aimed at maintaining the operational integrity of the business rather than replacing the owner's income directly. However, it’s important to understand what the policy does cover. Utilities and rent costs, as well as equipment lease payments, are considered necessary overhead expenses for running a business and are therefore covered under a typical business overhead expense policy. Employees' salaries may also be covered in some policies, depending on the terms, but the primary focus remains on maintaining essential operational costs rather than providing for the owner's personal salary. The correct answer should align with the types of expenses that ensure the business can continue to operate despite the owner’s inability to work, detailing how the policy protects against financial burdens that could jeopardize the business’s function.