As a business owner, it’s essential to get a thorough understanding of your insurance needs. The fact is, all businesses face significant insurance risks, which vary depending on your industry and location.
These risks can be anything from weather damage, property damage, or data breaches. Insurance coverage, like business hazard insurance, can save your entire business should disastrous events occur. Learning more about scenarios that require hazard insurance will help you keep your business protected long-term.
Keep reading this guide to learn five scenarios where you’ll need hazard insurance to protect your business.
Theft and Vandalism
Business hazard insurance protects you from property damage, which includes damage from theft and vandalism. This protection is more important than you may realize. Business theft is on the rise, with over 56% of American businesses experiencing theft in the past year.
When this occurs, many businesses have to face increasing their prices as a result of shoplifting.
If someone manages to get inside your business, they can steal valuable inventory and damage your business to the point where you must remain closed. You then have to deal with the cost of missing inventory and not being able to operate normally.
In addition, business owners selling higher-risk products like cannabis face even greater risks of theft. In these cases, business owners need special insurance like cannabis insurance to cover these hazards.
While you might see commercial property insurance and hazard insurance used interchangeably, certain hazard policies are designed for specific events like theft.
Ensuring you have the exact policy you need for managing theft is key.
Damage From Cars or Airplanes
Although damage from cars or airplanes initially sounds like one of those unlikely small business hazards, it does happen.
Thousands of car accidents occur every single day in the United States. Car accidents don’t only happen on the road either, they can impact businesses and people’s homes. Same thing with airplane crashes, and this is especially the case if your business is near an airport.
Hazard insurance covers key damages if this situation should occur like:
Outdoor landscaping like a fence
Inventory
Tools and equipment
Personal property
This coverage is essential since an accident of this magnitude would do extensive damage to your building and belongings. If you don’t have hazard insurance, it would have the potential to wipe out your business entirely.
Fire and Smoke Damage
Business insurance is also crucial for fire and smoke damage. Fires can happen at any time due to faulty electrical wiring or arson. Fires can even result from severe weather like lightning strikes.
Although fire insurance is typically included in property insurance policies for commercial buildings, this can vary.
Some policies may only cover certain types of structural damage and damage to the contents inside. Other policies may only cover a fire that was a result of specific factors.
The biggest issue with having a fire is how much damage it actually causes. You’ll have to contend with structural damage and then the contents of your business. The smoke can seriously damage your furniture, ruining paint and wood stains.
It also can destroy all your files, papers, and computer equipment. If the damage is severe enough, you won’t be able to salvage anything.
Therefore, it’s best to have a specific fire hazard insurance policy. This ensures that you have enough coverage in place to cover all the business damage that occurs.
Also, if you move your business and get a new lease or refinance with a new lender, you’ll likely be required to carry fire hazard insurance.
Water Damage
Water damage can be tricky for businesses, and this is where hazard insurance comes in handy.
First, you’ll find many commercial property business insurance policies have specific rules about water damage. Some policies will cover burst pipes if it happens suddenly and is unexpected.
However, they may not cover burst pipes if it’s due to negligence of normal wear and tear. This is because many policies state proper upkeep for pipes is your responsibility as a business owner.
In addition, many policies may exclude water damage that occurs from things like:
Vehicles
Sewage issues
Earthquakes
Damage from another person’s property
Lack of maintenance
You can even run into trouble getting coverage if you have a burst pipe or other water damage that causes an electrical problem.
Finally, sprinkler leakage from a fire can also cause significant water damage. If your regular policy doesn’t cover this type of water damage, you’ll have to pay for it yourself.
Overall, business hazard insurance is necessary to cover any water damage not normally covered by other general policies.
Storm Damage
Storm damage can also be tricky when it comes to insurance policies. It’s essential not to underestimate the damage storms can do to small businesses. For example, a recent study showed that wind and hail damage account for 15% of all small business insurance claims. What’s more, the average claim cost is $26,000.
Winds and hail can be strong enough to tear up siding, break windows, and cause severe injury. It can also cause serious damage to roofing which then leads to water leaks and potential floods.
This becomes even more of an issue if you live in an area prone to storms like Florida and Nebraska. What’s more, living near the water increases your risk of major storms like hurricanes.
Depending on where you live, you may need special insurance coverage, like if you live in a flood zone.
In most states, commercial property insurance policies should cover damage from wind and hail. However, in some cases, you’ll need to add extra storm damage coverage to your policy.
Remember, even if you have a policy, you need to ensure that specific weather hazards are covered.
Consider Getting Business Hazard Insurance Today
Now that you know how business hazard insurance can protect your business in various scenarios, you can start looking for policies.
Be sure to do your research and read the fine print carefully before signing anything. This will allow you to get a policy that meets your business needs.
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