What is Hazard Insurance?
Hazard Insurance protects property from disastrous events like fire, severe storms, hail, and other calamities. Hazard Insurance is not comprehensive: you’ll need to purchase each specific event type to be compensated for a loss.
Unlike Catastrophe Insurance, Hazard Insurance refers to a specific portion of coverage within an existing policy that protects a physical structure. For small businesses, it is sometimes called Business Property Insurance and can be part of a commercial insurance policy.
What does Hazard Insurance Cover?
The hazard portion of a business property coverage policy normally includes coverage for:
- Theft
- Hail
- Lightning
- Vandalism
- Explosions
- Fire damage
- Civil unrest or rioting
- Snow, sleet, or ice
- Power surges
Businesses in areas with particular concerns should opt for a separate hazard policy. Some locales are more prone to earthquakes, flooding, or even terrorist attacks and damage from war. Such perils require separate policies, so owners in such volatile areas should consider adding the protection that Hazard Insurance affords.
Separate Hazard
Insurance Policies
Many states that have higher-than-normal occurrences of certain dangers (like tornadoes, earthquakes, or floods) exclude coverage for those events. Business owners in such areas must buy hazard insurance separately.
For example, business insurance policies in Florida won’t cover hurricanes or flooding. In the same way, Californian business owners will need to obtain a separate policy to cover earthquakes.
It may seem odd that insurance companies wouldn’t cover events that are likely to happen in high-risk areas. The likelihood for the events is the very reason they don’t include coverage unless you pay to add these hazards to your policy.
The Types of “Hazard” Insurance to Consider
If you are in an area prone to these natural disasters you’ll want to consider:
Flood Insurance:
Covers damage to your property that is caused by any sort of flooding (i.e. ice/snow melting, flash flooding, storm surge from hurricanes).
Earthquake Insurance:
Covers damage to your property from the effects of an earthquake, up to the limits of your policy.
Terrorism Insurance Coverage:
Similar coverage to that of property insurance for acts of terror.
When Are You Required to Get Hazard Insurance?
Most lenders require small business owners to obtain property insurance coverage before they’ll lend money. Banks want to ensure that their investment is protected in the event of a disaster.
The Small Business Association requires owners to have property coverage to qualify for the Paycheck Protection Program (PPP) loan. If you’re a PPP loan recipient or are applying for the second round of funding, your policy must include hazard coverage.
How Much Does Hazard Insurance Cost?
Several factors influence how much you’ll need to pay for Hazard Insurance, including:
- The property’s age
- Your preferred limits and coverage options
- The property’s value
- Whether or not you choose full replacement cost
Consider a Business Owners’ Policy
Owners that need property insurance may benefit from purchasing a business owners’ policy (BOP). BOPs include:
Commercial Property Insurance:
This covers your physical assets like the structure, furniture, equipment, and important documents.
General liability coverage protects your business if a customer or their property is injured. It also protects you if you’re accused of libel, slander, or advertising injury.
Business Interruption Insurance:
If your business suffers property damage and you cannot operate while it is being repaired, business interruption insurance can cover the cost of a temporary location to operate. It can also cover lost profits, payroll, taxes, and more.
A business owners’ policy can be a more affordable way to cover your business. Our agents can help you assess your business insurance needs.
Get a Free Small Business Insurance Quote
At Foy & Associates, we work hard to help small and medium-sized businesses get insurance coverage that protects them and stays on-budget. We’ll make the whole process quick and easy so you can get back to running your business. To get a quote, more information, or ask questions, fill out the form at the top of the page or call us at 800-433-5353.
Additional Business Insurance Coverages To Consider: Professional Liability Insurance, Workers’ Compensation Insurance, Earthquake Insurance