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Hazard Insurance Definition: Hazard insurance protects property from natural disasters such as hail, fire, severe storms, and other catastrophes. Each specific peril must be included in the policy for there to be coverage and compensation for a loss.
Many people use hazard insurance interchangeably with catastrophe, but they were two separate types of policies. In most cases, hazard insurance refers to a portion of a homeowner's policy that covers the structure. In small businesses, it can be part of a commercial insurance policy called business property insurance. Catastrophe insurance is a completely separate policy.
The hazard insurance portion of a business property coverage policy typically includes coverage for:
So when would you need a separate hazard insurance policy? Perils such as flooding, earthquakes, acts of terror, nuclear attacks, or damage from war are often excluded and require separate insurance policies. If you are in an area prone to these natural disasters you’ll want to consider that coverage.
Sometimes, if your business is in a state that excludes perils like earthquakes, hail, flooding, etc. from home insurance policies, you may need to get separate coverage—which is where hazard insurance comes in.
For example, if you own a beachfront business in Florida, a business insurance policy isn’t going to cover hurricanes or flooding. Likewise, if you live in California you’ll need a separate policy that covers earthquakes.
Why do business insurance and homeowners policies exclude these things? Because they’re likely to happen. An insurance company won’t cover something likely to happen in a high-risk area unless you pay for additional coverage.
If you are in an area prone to these natural disasters you’ll want to consider coverage for these types of coverage.
Many mortgage lenders require small business owners to obtain property insurance coverage before they can secure a loan. Likewise, if someone wants to get a mortgage for a home, they’re required to get homeowners insurance. Banks need to make sure that their investment is insured if something were to happen.
The Small Business Association requires any business owners to obtain property coverage to qualify for the Paycheck Protection Program (PPP) loan. So if you received a loan through the PPP program or are applying for the second round of funding that was just announced, you’re required to obtain general liability or business property insurance that includes hazard coverage.
You want to make sure your commercial property insurance has comprehensive coverage for hazards. What can influence the cost that insurance companies charge?
If you need to get property insurance, consider purchasing a business owners’ policy (BOP). What does a business owners' policy cover?
A business owners’ policy is often a more affordable way to obtain the coverage you need to protect your business. Speak to an agent to help you assess your business insurance needs.
Our goal at CommercialInsurance.Net is to help small and medium-sized businesses get the insurance coverage they need at an affordable price. We want the process to be quick and easy. If you’re interested in a quote, want more information, or simply have questions, complete the form at the top of the page or call us at 877-907-5267.
Additional Business Insurance Coverages To Consider: Professional Liability Insurance, Workers' Compensation Insurance, Earthquake Insurance