What Is Hazard Insurance for Small Businesses?

If you’re a business owner, you need to protect the property and equipment you use to run your company. One way to protect your assets and inventory is through hazard insurance – here’s how it works and how to get hazard insurance for business property.

What Is Hazard Insurance for Business Owners?

Hazard insurance, also known as commercial property insurance or business property insurance, is a type of business owner's insurance policy. If your property is damaged due to a threat e.g. an accident or vandalism, then this type of policy covers the cost of repairing the property or replacing equipment. 

Are you a homeowner with a home-run business? You might have hazard insurance as part of your homeowners’ insurance policy – just make sure it’s sufficient to cover your needs.

What Does Hazard Insurance Cover?

Hazard insurance, or commercial property insurance, covers a range of business risks. Most policies cover damage or loss resulting from:

• explosions 
• fire and smoke
• power surges
• storms e.g. hail, lightning
• rioting 
• theft 
• vandalism

The exact level of cover varies depending on your policy. For example, some policies will cover water damage, whereas others will only cover certain types of water damage, and so on.

What Is Not Covered By Hazard Insurance?

Not all events are covered by hazard insurance. Hazard insurance often excludes acts of war, terrorist attacks, earthquakes, and other natural disasters. You may need additional insurance products, such as flood insurance, to cover these incidents, depending on your business. 

Typically, to protect your business more generally, you’ll need other policies such as general liability insurance or commercial auto insurance. 

Who Needs Hazard Insurance?

Any business owner can benefit from hazard insurance. However, it’s especially beneficial if you:

• own or rent a property
• rely on expensive equipment to run your business e.g. you’re a manufacturer
• could suffer significant downtime due to equipment damage e.g. you’re an IT firm 
• face severe revenue losses from damaged stock or inventory e.g. you’re in retail

Even if you’re a sole proprietor, or you run a home-based business, you could still benefit from hazard insurance.

Is Hazard Insurance Legally Required?

The exact laws vary by state, but hazard insurance is not always legally required for a business. However, even if it’s not a legal requirement, it’s still crucial to protecting your business – and your assets – from significant losses.

How Much Does Hazard Insurance for Small Businesses Cost?

The cost varies – no two businesses are the same. How much you’ll pay for hazard insurance depends on factors such as:

• Property value: The more valuable your property, the more you might pay for business owners insurance such as hazard insurance. 
• Equipment value: It may cost more to insure more expensive or complicated equipment, depending on the type of business you have. 
• Level of cover: If you want the insurer to cover the cost of replacing property, then this may cost more than getting the actual cash value for an item. This is because property depreciates in value over time. The actual cash value is probably less than the cost of buying a new, replacement item, so it’s normally cheaper to seek cash value cover.

Shopping around is the best way to get hazard insurance for a small business – contact InsurePro to learn more.

Do You Need Hazard Insurance for an SBA Loan?

Yes. If you want to qualify for a loan from the Small Business Administration (SBA), then you will need hazard insurance. 

The reason for this is simple: before the SBA lends you money, they want to know that your property is secure. They need to know you can afford to repair your property or replace damaged equipment to get back up and running. 

Otherwise, if there’s significant property damage, there’s a chance you won’t be able to resume your business, which makes it much harder for the SBA to recover the loan amount.  

What Is Proof of Hazard Insurance for a Business?

Proof of hazard insurance is simply your paperwork proving that you have property coverage in place. Your insurance company can provide you with any documents you need if you’re required to show proof of hazard coverage.

Where Can I Buy Hazard Insurance for Business Property?

If you’re a small business owner, then you need to protect your business with the right level of insurance coverage. The experienced and friendly team at InsurePro can help you find sufficient small business insurance to protect your property, assets, and employees – it only takes a few minutes to get started.

So, whether you need hazard coverage or general liability insurance, we’re here to help. Request a quote today!