Situations that make it more likely that a loss will happen.


What is a hazard?

A hazard in small business insurance refers to any unplanned event that can cause physical damage or loss to your business property, equipment or inventory.

Think of it like a threat to your business’s physical well-being. Common examples include:

  • Fire
  • Water damage (excluding flooding)
  • Wind damage
  • Snow, sleet or ice
  • Hail
  • Theft
  • Vandalism

Basically, anything that could unexpectedly damage your stuff or disrupt your operations falls under the umbrella of a “hazard.”

5 types of hazards small businesses encounter

There are different categories of hazards and each influences insurance coverage in distinct ways. These categories include:

  1. Physical hazards: Tangible risks that stem from the environment and property, such as the threat of water damage or fire. These are risks you can see and touch. If your business is located in a flood-prone area, you may pay a higher premium or need specific mitigation measures in your policy.
  2. Moral hazards: Tied to an individual’s character, particularly dishonesty or fraudulent activities. Insurers often conduct background checks to reduce these risks, which could lead to higher premiums or stricter terms.
  3. Morale hazards: While related to an individual’s character like moral hazards, these are not intentionally deceptive. They’re characterized by an attitude of carelessness and the belief that the insurance policy will cover any harm, no matter what happens. Insurers counter this with deductibles, coinsurance, and by promoting better risk management.
  4. Legal hazards: Risks that small business owners face when laws or regulations change, affecting the likelihood or amount of insurance claims. For example, if a new law increases liability in your industry, you may need to adjust your insurance coverage to stay protected.
  5. Hazardous activities: High-risk operations common in industries like construction and manufacturing. Insurers may require safety checks, training and proper gear to manage these risks. 

What is hazard insurance?

Hazard business insurance often goes by another more common name — commercial property insurance. It can help you get back on your feet financially if your business property is ruined by water, fire, wind, or other covered events.

Most hazard coverage include exceptions and exclusions, the most common of which being water damage caused by floods, earthquakes and war-related losses.

It’s critical to carefully review your policy documents to ensure you’re receiving the coverage you require to protect yourself from the risks that are most likely to disrupt your operation.

How to protect your business from hazards

There are measures you can take to manage risks, protect your business from hazards and potentially lower your insurance costs. Start by identifying all potential risks in your business, both physical and non-physical.

After assessing your risks, review your business insurance coverage for gaps. Your business needs vary as you grow or due to external causes. If your business operations, employment or assets change, you may need to update your insurance.

For physical hazards, regular maintenance of your premises and equipment is your first line of defense. Consider making upgrades where necessary, like reinforcing fixtures and installing smoke or carbon monoxide detectors.

When it comes to operational hazards, educating your staff on safety standards and establishing clear protocols is key. Practice, enforce and regularly review workplace safety.

Don’t forget about security measures to prevent theft and vandalism. A few surveillance cameras and strong locks can go a long way in deterring criminal activity.

And finally, keep your finances healthy. Diversifying your revenue streams and maintaining a healthy cash flow can help you bounce back from any losses that occur.

NEXT helps small businesses stay covered

Small businesses are bound to run into hazards sometimes. NEXT makes it easy to get the business insurance coverage you need and manage insurance if things change. Our policies are designed to be affordable and customizable..

You can start a quote, customize your options and access your certificate of insurance online immediately — in about 10 minutes.

Start your instant quote today.

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Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.
General Liability insurance
General Liability
Protect yourself from accidents that cause physical injury or damaged property.
Professional Liability or Error and Omissions Insurance
Professional Liability/E&O
Shield yourself from lawsuits that claim your work errors caused financial losses.
Workers' Compensation Insurance
Workers’ Compensation
Cover medical bills and lost wages if your employees have an accident at work.
Commercial Auto Insurance
Commercial Auto
Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.
Tools & Equipment Insurance
Tools & Equipment
Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.
Commercial Property Insurance
Commercial Property
Keep your building, inventory and equipment protected from fire or water damage.
Business Owner’s Policy Insurance
Business Owner’s Policy
Combine general liability and commercial property into one policy to protect your business.
* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.

Any starting prices or premiums represented before an actual customer quote are not guaranteed and are representations of existing premiums of active policies as of December 6, 2023. To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.