Business owners should be aware of what business hazard insurance typically covers so they can make informed decisions about which policy will best suit their needs. While the terms, conditions and exclusions of each policy may vary, business hazard insurance policies typically cover losses to business property arising from the following events:

Fire, smoke, and water damage
Theft and vandalism
Hail and lightning strikes
Explosions or collapse
Automobile or aircraft damage

If certain coverages are more important than others for a business, those can be discussed with a licensed insurance agent to help find cost-effective policy options based on any specific needs. It is important to make sure the business is adequately covered.

Is Business Hazard Insurance Necessary?

Although business hazard insurance may not be required in all states, it can be an important risk mitigation tool and should be considered when exploring business insurance needs. While helping business owners protect against losses to business property, business hazard insurance also provides business interruption coverage which helps protect a business against financial losses if it is forced to shut down due to a covered event. While the terms, conditions and exclusions of each policy may vary, business interruption coverage typically includes coverage for lost income or profits, costs to restore operations, operating expenses, loan payments and taxes.

Business Hazard Insurance vs. Homeowners Insurance

Another consideration when selecting the appropriate type of business property insurance is whether a business operates from a home office or commercial business site. If a business is operates out of a home, any homeowners insurance policy should be reviewed to determine whether business property may be covered and, if such coverage exists, whether it is sufficient or appropriate for the specific business needs. It is important to discuss coverage with the homeowners’ insurer as some carriers may require a separate business hazard policy be obtained for businesses that operate out of the home.

What Is the Difference Between Business Hazard Insurance and Commercial General Liability Insurance?

Business hazard insurance is a type of first party coverage that typically covers damage to the business owner’s commercial property resulting from specific risks or hazards, such as fire, theft, or natural disasters. Commercial general liability insurance, on the other hand, is a third-party liability policy which covers bodily injury, property damage and advertising injury caused to third parties, not the policyholder itself.