You can’t put a dollar sign on the hard work and dedication you’ve put into building your small business, but there could be a great cost to not protecting it with the right small business hazard insurance.
Consider the rising number of weather-related disasters taking place across the United States. In the last 40 years, there were 338 weather and climate disasters where damages and costs reached or exceeded $1 billion.1
Property crime rates have also spiked post-pandemic, with the number of property offenses, including thefts and robberies, increasing by around 20% in some major cities.2
While large businesses may have the capital to support losses caused by a strong storm, fire or theft, even a small inventory loss could severely set back small businesses.
That’s why it’s important to protect yourself and your business with both grassroots solutions and the right business hazard coverage.
This guide will cover:
Hazard insurance often goes by another more common name — commercial property insurance. It can help cover financial losses if your business property is damaged by water, fire, wind or other events included in your insurance policy.
The key to understanding how it applies to your business and what it covers is to look at the types of property your business owns or rents and what accidents or disasters could impact them.
Let’s start with your business property:
Now consider any external acts that could cause damage to these assets. Many business hazard policies include coverage for losses due to:
There are exceptions and exclusions in most hazard policies, the most common being water damage caused by floods, earthquakes and losses caused by war.
It’s important to read your policy documents closely to make sure you are getting the coverage you need to protect you from the hazards that are most likely to interfere with your business.
Replacement value coverage can help cover your business loss by providing the cash needed to replace your damaged property. For example, if water damage destroys your work computer, replacement coverage would help cover the cost of a new computer equal to the cost of that you paid.
Actual cash value coverage will reimburse you for the value of the property that was damaged. The actual value is often less than replacing damaged property due to the depreciation of assets.
The U.S. Small Business Administration (SBA) can be a helpful resource for small businesses looking to secure loans.
Those loans are issued through participating lenders and are guaranteed in part by the SBA. Small businesses can use the funding for a variety of purposes, including:
To obtain an SBA loan you must have the right small business insurance.
While the type of insurance required for an SBA loan depends on which loan you get, all require hazard insurance. This rule applies to loan programs, such as:
It is important to maintain your hazard business insurance policy throughout the life of an SBA loan while also meeting any other property requirements.
Like most types of insurance, there is not a one-size-fits-all hazard business plan.
How much you pay for this coverage can depend on multiple factors related to your business and the value of its property.
It’s a good idea to know the value of your business property. You might need to share that information when you get a quote for commercial property business insurance.
Learn more about commercial property insurance costs.
Historically, buying insurance has been daunting for small business owners. However, the SBA and organizations like NEXT are making it easier with fast, affordable and tailored online options.
Here are a few steps to consider when purchasing business insurance:
Ask yourself questions about the types of accidents and natural disasters that could impact your business.
Consider your location and the weather typically experienced in your area along with foot traffic, vehicle traffic and crime rates.
What type of risks are you exposed to in your day-to-day operations? Do you rely on expensive equipment or inventory to do your job? Do people regularly visit your business space?
All of these components will help you create a clear picture of your hazard risk.
Not all insurance programs are built the same. Compare insurance coverage, rates, terms and benefits to find the coverage that works best for your needs.
Check out insurance provider reviews and customer support to see if it’s a company that matches your expectations for service.
Your business requirements change over time, whether caused by growth or external factors outside of our control.
If your business operations, staffing or assets change, you might need to update your business insurance coverage.
NEXT provides commercial property insurance (a.k.a. Hazard insurance) designed specifically for small businesses and self-employed entrepreneurs.
We make it easy to quickly get a quote, buy coverage and get instant access to your certificate of insurance, which can help to speed up the process as you apply for SBA loans.
Start a free quote today. It only takes about 10 minutes to get tailored options for your business.
1 National Centers for Environmental Information “Billion-Dollar Weather and Climate Disasters,” 2022.
2 New York Times “A Shift in Crime,” September 23, 2022.
3 U.S. Small Business Administration “Loans,” 2022.
General Liability insurance can provide financial help for a wide range of risks related to injuries to non-employees and damage to property you don’t own.
For example, if a customer or client trips at your business and gets injured, general liability could help cover the medical or legal expenses.
This coverage can be bundled with commercial property insurance for a business owner’s policy, also known as a BOP.
Workers’ Compensation insurance can help support medical expenses and lost wages if an employee is injured on the job while also protecting the business from financial losses if the employee files a lawsuit. In fact, in many states, workers’ compensation is required as soon as you hire your first employee.
Professional Liability insurance can help protect your business against accusations of professional mistakes or negligence.
Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.