Do You Need Business Hazard Insurance?

You might be surprised and unhappy to learn that hazard insurance is not included in your existing business insurance policies.

Business hazard insurance is often included in your commercial property insurance policy. If you have a mortgage, obtaining business hazard insurance is likely a requirement.

Check the specifics of your policies with your insurance company.

What is Hazard Insurance for Business?

A hazard insurance policy protects small businesses against accidents.

Accidents can encompass natural disasters like those resulting from wind damage or wildfires. Business hazard insurance can also safeguard you against associated damages, including losses from power outages, explosions, theft, riots, and vandalism.

Benefits of a Hazard Insurance Policy for Small Businesses

If you own a business property, your worries don’t end when you lock the doors. Business insurance should cover you for things – like accidents – that are beyond your control. That’s where hazard insurance cost is worth its benefits:

1. Peace of mind
2. Protection of business property
3. Protection against natural disasters
4. Ability to recoup the business property damages due to looting and vandalism
5. Financial protection – Through the insurance company, less time to wait before being reimbursed.

How to Find Out if You Already Have Hazard Insurance

Hazard insurance may be included within existing policies.

Check your commercial property insurance policy and/o your business property insurance.

If you operate your business from home, review your homeowner’s insurance policy to determine if it includes business hazard insurance. In addition to your homeowner’s insurance, you will also need general liability insurance. If your homeowner’s insurance does not cover business hazard insurance, you may need to purchase it separately.

Check with your insurance company.

What is Covered by Small Business Hazard Insurance?

What does business hazard insurance cover? Business insurance coverages with a hazard policy include:

1. Costs for equipment repair and replacement – Coverage may extend to damages resulting from building collapses or interior flooding caused by hurricanes.
2. Property damage – Coverage can include repairs to the building exterior and entryways.
3. Inventory damage – Inventory can include finished products, such as clothing, as well as the materials to make the products.
4. Damage to outdoor landscaping, including fencing and lighting.
5. Lost income – if you can’t open your business due to damages, you may be able to make a claim to recover financial losses.

What is Not Covered by Business Hazard Insurance?

1. Equipment breakdown coverage – If a machine malfunctions and you experience production delays, that situation is not covered. However, if a tornado or severe windstorm leads to a tree falling on the building and damaging the machine, hazard coverage would apply. To protect against production losses due to breakdowns, you can obtain business interruption insurance.
2. Damages to personal property. For example, your personal vehicle is parked at the entrance, and a windstorm causes a tree to break and fall on the vehicle. Your personal auto policy would cover that. If it’s a business vehicle, it would be covered.
3. Injuries sustained on your property, bodily injury suffered by clients or visitors, and ensuring medical bills.
4. Injuries or damages caused by your products or services. For that, you’ll need professional liability insurance. That type of insurance is often called Errors and Omissions insurance.
5. Any “unnamed” hazards. Your business hazard insurance policy will specify certain hazards. If an accident, hazard, or natural disaster occurs that is not specified in your policy, you will not be covered.

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How Much Does Hazard Insurance Cost?

When you begin to shop with an insurance company, you’ll be pleased to learn that hazard coverage isn’t very expensive.

As a general estimate, you can anticipate a monthly payment of approximately $60, accompanied by a $1,000 deductible and a claim payment limit of $60,000.

The cost will be higher if you live in a high-hazard area, such as a coastal area.

How to Choose the Right Hazard Insurance Company for Your Business

As previously stated, start your research with a call to your insurance company. See if you already have hazard insurance through your existing business property insurance. Business owners need hazard insurance and often have enough through existing policies.

If you don’t have hazard insurance coverage, start a list:

1. Analyze your risks, such as hurricanes, earthquakes, and/or flood insurance.
2. Through area business organization, network with other small business owners. Find out how they handle this issue, and which insurance company they use.
3. Seek insurance advice. You may find a small business insurance specialist who bundles commercial property insurance with general liability coverage, workers’ compensation insurance, property coverage (including business equipment), business owner’s policies, cyber insurance, professional negligence, and other types of business insurance.
4. With just a phone call, you can shop amongst insurance providers and find your best fit.
5. Schedule an in-person meeting with your insurance agent. While property insurance coverage is crucial, having an attentive and responsive agent is equally important.
6. Analyze the policies offered, comparing costs involved such as deductibles. Also, pay close attention to how loss or damage to business equipment and/or inventory is covered – would be receive the actual cash value or the replacement cost?

How to Get Hazard Insurance

If you shop online, you can use tools to easily compare insurance policies. With the policy’s benefits and costs displayed side by side, you can more easily choose the right coverage as a small business owner.

Check with several reputable providers, including State Farm, Nationwide, Travelers, Allstate, and Farmers. In just a few clicks, you can review the details of what each company provides.

Is Hazard Insurance the Same as Commercial Property Insurance?

No, it’s not the same. It may be included within a commercial property insurance policy, or you may need additional coverage.

Is Hazard Insurance Essential?

Yes.

You can’t predict or prevent an accident or natural disaster. As your business grows, you’ll have more reasons to add Hazard coverage options.

If you’re applying for a mortgage or leasing business property, often hazard insurance will be required. You can add it to your business owner’s policy.

Does SBA require hazard insurance?

Yes. When applying for a loan from the Small Business Administration (SBA), you are required to provide evidence of your Hazard Insurance coverage. Without this coverage, your application for an SBA loan will not be approved.

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