Hazard Insurance

Get A Hazard Insurance Quote In Queen Creek

If you own a small business and you’re wondering whether or not you need business insurance, the simple answer is yes. Every business owner needs small business insurance to help protect their company from risk. Accidents happen all the time and business owners need to be protected in case an accident happens in the workplace. It’s important for small business owners to make sure that they have the insurance they need to cover the risks to their businesses. While a disaster can be devastating for any business, small businesses have an especially difficult time recovering. Many operate on a tight budget and the time and costs involved in recovering from an accident or disaster could make it hard or even impossible for a business to bounce back. This is why it’s critical for businesses to have hazard insurance. 

What Is Hazard Insurance?

Hazard insurance is important coverage that can help protect your business from financial losses in the event that the owned or rented building of your business is damaged due to certain covered hazardous circumstances, such as weather-related events, fires, vandalism, and more. It also helps protect the equipment you use to run your company. Hazard insurance can help cover the cost of replacing or repairing your personal property, tools and equipment, inventory, furniture, computers, accounts receivable, valuable documents, and outdoor landscaping. This type of insurance is often included under coverages, also called business property insurance or commercial property insurance. Still, your business property insurance may not cover all hazards your business is at risk for. 

Hazard insurance for small businesses typically covers damages, losses, or replacement costs related to theft, fire, wind, power outages, weather-related natural disasters, explosions, vandalism, or rioting. However, not every type of hazard is covered in a small business property insurance policy and there are typically certain exclusions. If a hazard isn’t explicitly written down in your policy, then it’s not covered. If you need additional coverage for hazards that are specific to your business, such as earthquakes, flood insurance, equipment breakdown, etc., then it’s important to have it added to your policy. It’s important for your to review your coverages with your insurance policy or agent to make sure you have everything you need for your small business. 

How Does Hazard Insurance Work?

Hazard insurance helps you to repair or replace structures on your business property that are impacted by a covered event. You would usually have to pay for the cost of the repairs or replacement upfront and you will, later on, be reimbursed for the costs according to whatever is written in your policy. Policies will usually cover either the replacement cost or the actual cash value. Policies that pay for the replacement costs usually reimburse you for the cost of replacing or repairing your property with comparable materials without deducting anything for depreciation. Policies that pay the actual cash value will reimburse you for the cost to repair or replace your property with the new materials minus depreciation. In other words, policies that pay actual cash value will typically reimburse you for less compared to policies that use replacement costs. Actual cash value policies also have cheaper premiums than replacement cost policies. This is why it’s important to properly review the terms of any policy you’re considering. Some business owners may prefer to pay a little bit more in premiums to get all the coverage that they need.

Who Needs Hazard Insurance?

Many states do not require business owners to carry hazard insurance. However, it’s best to get a policy as it could cost thousands of dollars for you to repair damage to your business structures. That’s a lot of money, especially for small businesses. You would also need to consider the cost of having to close your business for a few days or weeks or even months depending on how bad the disaster has affected your business. This disaster could ultimately lead to your business permanently closing down as well. If you run your business from home, take note that home insurance won’t cover you. Homeowner insurance is limited when it comes to how much it will cover in regard to your business. This may not even cover enough for your business equipment or inventory. This is why it’s critical to have a commercial property insurance policy or a business owner's policy that includes hazard insurance. 

You should also take note that business hazard insurance is required for an SBA loan. The Small Business Administration (SBA) requires you to have hazard insurance in place if you plan on getting an SBA loan, including economic injury disaster loans (EIDL) due to disaster circumstances. The SBA requires that certain business insurances are in place to protect both you and your business and to mitigate the risk that the lender takes on providing your business a loan. When the SBA requires you to have certain insurance coverage in place, it can provide lower interest rate loans to business owners because the risk is reduced on the lending agency’s part, which is a win for small businesses. Other lenders may also require certain business insurance coverages in place prior to providing a loan. 

Business Hazard Insurance Coverage

Commercial property insurance policies provide hazard insurance coverage. You can buy this insurance policy on its own or buy a business owner's policy, which bundles commercial property insurance, general liability insurance, and business interruption insurance.

• Commercial Property Insurance - Commercial property insurance covers more than just the structures of your building. It covers permanently installed fixtures and items needed in maintaining the building, like appliances. It also covers the contents of the building, such as personal property, inventory, and items in your care.
• Business Owners Policy - Business owner policies bundle commercial property insurance with two other types of coverage, such as:
• General Liability Insurance - This coverage helps protect you if you are sued because of bodily injury or property damage, like when a customer gets into an accident in your business location or if you damage something in your client’s home. It also covers personal and advertising injury, which includes claims regarding libel, copyright infringement, and false advertising.
• Business Interruption Insurance - This insurance helps to make up for the losses you experience while your business is temporarily closed to make repairs. It helps make up lost income, make mortgage payments, rent, or loan payments, pay taxes, and make employee payroll.