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AVMA LIFE Educational Resources

Professional Overhead Expense vs. Business Interruption Insurance: What's the Difference?

Posted on 5/20/2020 by AVMA LIFE in Professional Overhead Expense Insurance Business Interruption Insurance
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Veterinary practice owners have a lot on their plate.

If you own a practice, you can attest to this fact. In addition to providing medical care to patients, you have to manage the budget, keep your employees happy, and market your services, among other things.

But perhaps one of your most important roles as a practice owner is helping ensure you, your employees, and your practice are protected if something goes wrong.

That's where professional overhead expense (also known as business overhead coverage) and business interruption insurance come into play.

If you get these two coverages confused, you're not alone (and we get it—you have a lot going on as it is!). The good news? It's never too late to gain clarity on something that can make a huge difference in the stability of your practice.

So… what's the difference between these two critical coverages, and why are they so important? Read on to find out.

Professional Overhead Expense (POE) Insurance Definition

POE insurance helps cover temporary operational expenses if you're physically unable to run your business due to a covered disability.

So, let's say a tumble down the stairs results in injuries that keep you from practicing for the considerable future. POE can pay a monthly benefit to help cover things like rent, utilities, and employees' salaries.

Other eligible expenses include:

  • Outstanding business debts
  • Postage and stationery
  • Equipment maintenance
  • The monthly average of taxes on the premises
  • Relief veterinarians' wages

POE is peace of mind—it helps ensure your business stays afloat, even if you can't physically be there to support it.

Professional Overhead Expense Insurance Real-Life Scenario

If you're unsure whether you really need POE coverage, consider this real-life story from an AVMA LIFE Trust insured.

Dr. Wander, a practicing DVM for over 33 years, faced a difficult situation when he was diagnosed with a severe essential tremor in his dominant left hand and arm, concurrent bilateral carpal tunnel syndrome, and crippling arthritis.

These injuries meant Dr. Wander had to take a break from his practice. But thankfully, his agent had convinced him early in his career to purchase AVMA LIFE POE insurance.

"Being a practicing DVM for over 33 years, I never realized how important having POE coverage would be… until I needed it. When the unexpected happened, it was a lifesaver."

Because he purchased POE insurance, Dr. Wander was able to keep his business afloat and heal without the stress of wondering how to make ends meet.

Business Interruption and Extra Expense Insurance Definition

Like POE, business interruption insurance (BII) gives you peace of mind. This coverage responds in the event an adverse incident (e.g. fire or natural disaster) causes your practice’s business operations to slow down or come to a halt entirely.

Unlike property insurance, which replaces or repairs damaged structures and building contents, BII protects your profits and offers financial reimbursement and assistance while your practice works to resume operations.

The Extra Expense portion of this coverage includes any extra expense the practice incurs in order to continue operating. Examples include renting at a temporary location, incurring additional utility bills, and more.

Business Interruption Insurance Real-Life Scenario

Still not sure if you need business interruption insurance? Consider this real-life example from an AVMA member insured through the PLIT program.

A practice was severely damaged during the California wildfires. The practice owner was informed that while the building was salvageable, extensive repairs were required to return to an operational state.

The owner’s general liability policy covered the cost of repairs to the building and its contents, but its BII coverage protected the owner and her employees’ financial security during the four-month long rebuild.

Thanks to BII and Extra Expense, the practice owner was able to continue operations out of a rental facility. Without this coverage, the practice may not have been able to financially survive the wildfires—despite having property and liability coverage in place.

AVMA LIFE and AVMA PLIT Can Help Protect Your Practice

As an AVMA member, you have access to group insurance through the AVMA Trust.

AVMA LIFE offers POE coverage with monthly benefits of up to $45,000 to help protect your practice if a covered injury or illness keeps you from working.

AVMA PLIT offers business interruption insurance as part of their Veterinary Business Owner's Package to help protect your business profits if physical damage to your property causes a slowdown or suspension of your practice.

Take a look at AVMA LIFE POE insurance and AVMA PLIT BII coverage today, and gain peace of mind knowing you are doing your very best to help protect your practice.

AVMA LIFE POE Insurance is underwritten by New York Life Insurance Company (NY, NY 10010) on Group Policy Form GMR. For more details, including features, costs, eligibility, renewability, limitations, and exclusions, visit the product page. The experiences of the individual described herein may not be representative of the experiences of all clients.

Arkansas Insurance License #1322

California Insurance License #0F76076

201018

NYL-1856984

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