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What expenses does a business Overhead Expense policy typically cover?

  1. Employee salaries and bonuses

  2. Inventory and stock purchases

  3. Business expenses such as rent and utilities

  4. Insurance premiums for business liability

The correct answer is: Business expenses such as rent and utilities

A business Overhead Expense policy is designed to cover the ongoing operational costs necessary to keep a business running during a period of disability for the owner or key employee. This typically includes business-related expenses such as rent, utilities, and other fixed costs that the business would still incur regardless of its income level. This type of policy helps ensure that essential expenses are met, thus allowing the business to continue its operations and maintain its financial health during challenging times. While options such as employee salaries and bonuses, inventory purchases, and liability insurance premiums are important to a business, they do not fall under the specific coverage of an Overhead Expense policy. Employee compensation is often addressed through different types of coverage, inventory purchases ensure the business can operate, and liability insurance protects against legal claims, but overhead expenses are specifically aimed at maintaining the basic operational functionality of the business.