Hazard insurance for your business: What it is and how to get it

You’ve worked hard for the small business you’ve built—whether you own the best restaurant in town, a vibrant daycare center, or a local five-star carpentry business. And you know firsthand that the right insurance coverages are crucial for your business (and your peace of mind).

Maybe you’ve landed here because you received a notice that you need hazard insurance for your business, but don’t fret. You might already have this important coverage in place.

And if you don’t have the business hazard insurance coverages you need, they’re super easy to get.

In this quick guide, you’ll get answers to these common questions:

• What is business hazard insurance?
• What does hazard insurance cover?
• Does the SBA require hazard insurance?
• Why is the SBA asking for hazard insurance?
• Does my business need hazard insurance?
• What is the purpose of hazard insurance for a business?

What is hazard insurance for a business?

Hazard insurance is important coverage that can protect your business from financial losses in the event of damages to your building or business property due to certain covered hazardous circumstances, such as some weather-related events, fires, vandalism, and more.

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 in your area. This brings us to the next question below.

What does hazard insurance cover?

Hazard insurance for small businesses typically covers damages, losses, or replacement costs related to the following:

• Theft
• Fire
• Wind
• Power outages
• Weather-related natural disasters, such as storms, snow, or lightning
• Explosions
• Vandalism or rioting

However, not every type of hazard is covered in a standard business property insurance policy. And certain exclusions exist. If it’s not listed in your policy outright or it’s excluded, it isn’t covered.

If you need additional coverage for hazards specific to your business—such as terrorist attacks, earthquakes, sewer or water backups, flood insurance, equipment breakdown due to user error, or something else—make sure to add it to your policy.

We can’t stress this enough: The hazardous incident must be listed in your policy to be a covered event. It’s important to regularly review your coverages with your insurance company or insurance agent to make sure you have what you need in place for your small business.

For example, let’s say your business is located in an older building in a historic area of your town known for regular sewer and water problems. In fact, most commercial buildings on your street have experienced some sort of city-related sewer issue in the last 15 years. Suppose your business property coverage doesn’t include sewer problems. In that case, you’ll need to purchase additional hazard insurance from your insurance company to cover losses, damages, or replacement costs due to sewer or plumbing incidents.

Does the SBA require hazard insurance?

Yes, you’ll need business hazard insurance for an SBA loan. The Small Business Administration (SBA) requires that you have hazard insurance in place if you’re getting an SBA loan, including economic injury disaster loans (EIDL) due to COVID-19 or other disaster circumstances.

But remember, you might already have the required coverage in place under your business property insurance policy. Additional location-related add-on coverages (such as flood insurance coverage) may be necessary to secure within 12 months of your loan approval.

Why is the SBA asking for a hazard insurance policy?

The SBA requires that certain business insurances are in place to protect both you and your business (if you’re a borrower of an SBA or EIDL loan) and to mitigate the risk that the lender takes on in providing your business a loan.

Essentially, when the SBA requires you have a certain insurance coverage in place to have an SBA or EIDL loan, it can provide lower interest rate loans to business owners because the risk is reduced on the part of the lending agency. (This is a win for small business owners across the U.S., so it’s a good thing!)

Other lenders may also require certain business insurance coverages in place before approving a loan. But getting the right business insurance doesn’t have to be a headache when you work with Huckleberry—get a quote today.

What other types of coverage does a small business need?

The types of business insurance you’ll need completely depend on what your business does, where it’s located, and how it operates.

Several typical business insurance coverages you’ll need to consider include:

• Workers’ compensation insurance: Workers’ comp is required in most states if you have even one employee (and you can be penalized for not having it). Check out our workers’ comp calculator to see what you’d pay with Huckleberry.
• General liability insurance: This liability coverage protects you if someone sues your business for bodily injury or property damage.
• A Business Owner’s Policy (BOP): This is a bundle of the most common small business insurance products you most need (and includes a combination of coverages listed here).
• Commercial property insurance: This one is straightforward—and is also referred to as business property insurance, and often includes basic hazard coverages. It protects your building and the stuff inside of it.
• Professional liability insurance: This policy helps protect you if you make a mistake that causes harm to a client.
• Commercial auto insurance: If you have a business vehicle, you’ll need this coverage.

How much does hazard insurance cost?

The cost of a hazard insurance policy for a business varies. Each business property policy is unique to each business and depends on coverage amounts selected, coverages required, the deductible amount you choose, additional add-on coverages, and more. You can find out what you’d pay in 5 minutes or less.

Does my business need hazard insurance?

Yes. Almost every type of business needs hazard insurance. In fact, as mentioned before, it’s required to secure certain types of funding, including SBA loans or COVID-19 EIDL loans.

And you definitely want the right hazard insurance coverage in place to protect your hard work, not just to secure funding.

For example, suppose you’re starting a restaurant business, and you carefully invested in high-end decor to serve customers in a fun and trendy environment. In that case, you’ll want to make sure you can replace that property if it’s damaged in a kitchen fire.

But in some states, if you run your business as a sole proprietorship from your home office and you have limited business property to insure (such as your computer), you may not need a hazard insurance policy that’s separate from your homeowners policy. You must check with your insurance company to determine if you’ll need a separate policy.

What is the purpose of hazard insurance for businesses?

The purpose of hazard insurance is to protect your business building or property, whether owned or rented, from damages or loss due to certain hazardous circumstances. As mentioned above, having the right amount of hazard insurance in place can also help you secure funding.

Every small business owner knows that doing business comes with financial risk, and having the coverage options you need in place helps mitigate some of that risk. That way, you can have peace of mind and focus on running and growing your business.

Get hazard insurance in minutes by following these 3 steps

Here’s how to get business hazard insurance in minutes.

1. Navigate to “Small Business Insurance” in the header above this article, and select “Small Business Insurance” from the drop-down menu. (Or simply visit the small business insurance page.)
2. Answer a few quick questions about your business, like what your business does and where your business is located.
3. Get your business hazard insurance quote in just a few clicks. From there, you can purchase your policy online instantly (without all the hassle of additional paperwork!).

And then you’re done! It’s that easy to secure hazard insurance for your business when you work with Huckleberry.

Still need more info? Check out our quick rate estimator for a ballpark figure of what you’d pay for workers' compensation insurance, an important aspect of your business insurance portfolio.

Running a small business is hard work—getting business insurance doesn’t have to be

Cross one more item off your to-do list by getting the hazard insurance for your small business. Huckleberry makes it quick and easy to secure the right coverages in just a few clicks.

Get your business insurance quote today.