When it comes to purchasing insurance for a commercial property, the number of policies available may bewilder business owners. This is often due to the similarities between policies, policy names, and what the policies do and do not cover. This is true for coverage like commercial hazard insurance. Knowing what commercial hazard insurance is and its parameters for coverage can help business owners make more informed coverage decisions.
Commercial Hazard Insurance
Commercial hazard insurance is a type of business property insurance that is most often referred to as commercial property insurance. This is important to note, as most business property insurance policies will not cover all the hazards a business faces. Hazard insurance is utilized to help protect a business from financial losses in the event of damages to the premises of the property and its contents.
What Does Commercial Hazard Insurance Cover?
Typically, hazard insurance will cover damage to business property, losses, or replacement costs related to:
- Theft and/or vandalism;
- Water damage;
- Weather-related natural disasters and severe storms; and
Even with all of these potentially covered risks, hazard insurance policies will not cover every event that causes property damage to a business. Most carriers exclude specific events and actions from coverage under a commercial hazard policy. As a rule of thumb, policyholders should review their hazard policies thoroughly and keep in mind that if an event is not explicitly listed in the policy or is specifically excluded, it generally is not covered. To ensure coverage for excluded events like earthquakes, floods, or equipment breakdowns, certain policy endorsements or riders can be purchased in addition to hazard insurance.
Getting in touch with an insurance coverage attorney can help ensure an event is covered under a hazard policy. They can thoroughly review the policy and ensure a business owner has the proper coverage for their specific company’s needs.
How Much Does Commercial Hazard Insurance Cost?
While each commercial insurance policy purchased is unique to the needs of the policyholder, certain variables can impact the cost of coverage. For instance, the overall value of the property is a major factor in determining its cost. This is because the more property a policyholder has to insure, the more expensive coverage can be. Additionally, the property can be valued at a replacement value or an actual cash value.
With replacement cash value, the insurance company will pay out the costs to help a policyholder replace the damaged property with something similar in value. With actual cash value, however, the insurance company will reimburse the policyholder for the value of the items before they were damaged. The actual cash value of an item is often less than the replacement cost due to the depreciation of assets over time.
The location of the business can impact the cost of coverage for hazard insurance as well. This is because areas that are more prone to natural disasters – like hurricanes, wildfires, and other major events – will likely experience more cases of property damage. This is also true when it comes to the age of the property. If a property is older and more prone to damage, it may cost more to insure than a newer property.
Insurance Coverage for Business Owners
For a business to have comprehensive coverage well before opening its doors to the public, it should consider purchasing a business owner’s policy. These policies work by bundling multiple policies, including:
- Commercial Property or Commercial Hazard Insurance: Provides coverage for the business structure, furniture, equipment, and other contents.
- General Liability Insurance: Protects the business in the event a client or customer is injured or their property is damaged. This coverage can also protect a business from being accused of libel, slander, or advertising injury.
- Business Interruption Insurance: Protects the business financially in the event it is inoperable after property damage. Business interruption insurance can cover the costs of lost income, payroll, taxes, and other business overhead items.
Insurance Coverage Attorneys
While having insurance coverage in place is required to own and operate a business, it can quickly become confusing. Many policies cover some of the same events and some have different names for similar policies. This combined with the nuanced and complex jargon often used in insurance policies can quickly give insurers the upper hand over their policyholders.
At Raizner Slania, our insurance coverage attorneys have successfully held some of the leading insurance companies in the world accountable for wrongly undervaluing, delaying, and even denying valid commercial property damage claims. If you need assistance with an insurance claim or with determining coverage, we can help. Contact our office today to see how we can help your business.