Business Hazard Insurance
What Is Business Hazard Insurance?
Business hazard insurance, also called hazard business insurance, is another name for commercial property insurance. It protects physical business assets such as buildings, equipment, and inventory from damage or loss caused by covered events like fire, theft, vandalism, and certain weather-related incidents.
This type of coverage helps protect a business from financial loss after property damage and is a core coverage for many small businesses.
What Does Business Hazard Insurance Cover?
Business hazard insurance helps pay to repair or replace business property after a covered loss.
It typically covers:
MISSED DEADLINES
BUSINESS PROPERTY INSURANCE
Covered causes of loss commonly include:
- Fire and smoke
- Theft and vandalism
- Wind, hail, lightning, and snow
- Explosions or building collapse
- Damage from vehicles
- Certain types of water damage, such as burst pipes or sprinkler systems
Many small business hazard insurance policies also include business interruption coverage, which can help replace lost income and pay ongoing expenses like payroll, rent, or loan payments if the business must temporarily close due to a covered property loss.
What Does It Not Cover?
Like most policies, business hazard insurance excludes certain types of losses. Common exclusions include:
- Floods and earthquakes, which require separate insurance policies
- Employee injuries or illnesses covered by workers’ compensation insurance
- Commercial vehicles that require commercial auto insurance
- Equipment breakdown due to mechanical or electrical failure
- General liability insurance covers liability claims involving third-party injuries or property damage
- Acts of war or terrorism
Who Needs Business Hazard Insurance?
Most businesses that own, lease, or use physical property need this type of coverage.
You need small business hazard insurance if you:
- Own or rent a commercial building
- Have valuable equipment, inventory, or tools
- Operate from a storefront, office, warehouse, or workshop
- Run a home based business with business owned property
- Have a business loan or commercial mortgage
Many lenders, including those participating in U.S. Small Business Administration loan programs, require proof of coverage to protect property used as collateral1.
Many lenders, including the U.S. Small Business Administration, require proof of coverage to protect their collateral2.
Is It Required?
Business hazard insurance is not typically required by state law. Lenders often require it when a business uses property or assets to secure financing. For SBA-backed loans, lenders require insurance that protects collateral against loss or damage, including hazard-related risks.
What Should You Know Before Choosing Your Coverage?
Before purchasing business hazard insurance, consider the following:
- Homeowners insurance typically provides limited coverage for business property and often excludes business related losses
- Home based businesses usually need separate small business hazard insurance or a commercial endorsement
- Policies may be written on an actual cash value basis, which factors in depreciation
- Policies may also be written on a replacement cost basis, which pays to replace damaged property with new items of similar kind and quality
- Replacement cost coverage usually costs more but provides stronger protection
It is often included in a Business Owner’s Policy, which bundles commercial property insurance, general liability insurance, and business interruption coverage into one policy.
Get Business Hazard Insurance
This type of insurance is available through most commercial insurance providers. Many small business owners work with independent insurance agents to assess risks, compare quotes, and choose coverage limits that align with their business size and growth.
Your Gild Insurance Agent is here to understand your business and find the right coverage tailored to your needs.
For a free, online quote in minutes, try out Gildber! The fast, hassle-free option for a business insurance.
Frequently Asked Questions
What is proof of business hazard insurance?
Proof of coverage is a certificate of insurance showing active commercial property coverage. Lenders often require it when business property is used as collateral for a loan.
What is the average cost of business hazard insurance?
The cost varies based on property value, location, industry risk, and coverage limits. Businesses with higher risk or more valuable assets typically pay more.
