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If you’re a professional who provides a service to clients, like an accountant, attorney, or doctor, you’ll need professional liability insurance. This type of policy protects you from client allegations of negligence and other types of wrongdoing. Your general liability insurance policy does not provide protections against claims resulting from carelessness, malpractice, mistakes, or misrepresentation, so for professionals in fields like yours, this kind of insurance is a must.

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How Professional Liability Works

Professional liability insurance (PLI) can be called different things, depending on the profession it’s being used for. For example, if you’re in the medical field, you will purchase “medical malpractice insurance,” or if you’re a real estate agent or accountant, you will need “errors and omissions,” or E&O. PLI is a specialty policy and is usually not included in homeowners’, in-home business, or business owner’s policies.

 

Most policies are “claims-made” policies, meaning that they will only cover claims if they are made both while your policy is active and if the incident occurred while the policy is active. While you may also find “occurrence” policies, which offer coverage for an incident that happened during the time your policy was active even if coverage has lapsed when the claim itself is made, these types of policies are difficult to find.

 

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What Does Professional Liability Cover?

PLI financially protects your business from legal claims and lawsuits brought against you, whether those claims are valid or not. Both frivolous and substantiated lawsuits may be covered by your insurance. This type of policy can protect businesses against the following kinds of claims:

 

  • Negligence or failure to meet standards – If you or one of your employees delivers subpar services, you could be at risk for a lawsuit. For example, say you are a consultant and you accidentally give your client incorrect advice that they later end up being sued or losing money over. They could then in turn sue you for giving them bad advice because they paid you to have the correct information.
  • Missed deadlines – If you miss a deadline, your client can make a claim against you for not fulfilling your contract with them. For example, if you work in cyber security, and you tell your client their business will be protected by a certain date. But for some reason the project takes longer and is not done by the deadline, if your client gets hacked after that deadline they can sue you for their losses. If you had met the deadline they may not have been hacked, so you can be held liable, but PLI can protect you from this type of claim.
  • Breach of contract – If your business does not meet the terms of anything specified in the contract between you and your client, you can be sued. This includes deadlines, product guarantees, and payments. PLI will cover you in the event of a claim like this.
  • Errors – No matter how careful you are, mistakes can happen, and those mistakes can be costly. For example, if you are an insurance agent, and you select the wrong coverage for your client. Or accidentally forget to turn in a portion of their paperwork, your client might not have the proper coverage in an emergency. They could end up losing a lot of money. And could sue you, so you’ll need PLI to financially protect your business.

 

What Isn’t Covered?

Professional liability insurance policies protect your business from claims of financial losses, not bodily harm or property damage, unlike other types of liability insurance. But there is an exception to this rule: medical malpractice insurance. Other than medical malpractice though, you file bodily injury claims under your general liability policy. 

 

PLI also doesn’t cover lawsuits brought on by employees claiming wrongful termination or harassment. Those claims would fall under employment practices liability policies. Additionally, fraud and criminal acts are not covered by your PLI. If you or an employee intentionally mislead a client or commit a crime, your PLI will not cover the claim.

 

The Cost of Professional Liability Insurance

Professional Liability Insurance generally costs between $500 and $1,000 per year. This can vary based on several factors, such as:

 

  • Your industry – The degree of risk and the financial consequences of a mistake differ from one occupation to the next. All of that is taken into consideration by insurers when setting premiums. 
  • Coverage and deductibles – PLI coverage limits can start at $250,000 and could reach into the millions. Your premium will cost more the higher your limits are. Additionally, if you choose a lower deductible, your premium will be more. When deciding on coverage limits, weigh the annual cost of your policy against potential expenses in the event that a client sues you. You need insurance that will cover both the cost of mounting a defense and potential damages. For instance, a typical professional liability policy will pay up to $1 million for a single claim. Or throughout the course of the policy if the coverage limit is $1 million (per occurrence and aggregate).
  • Your location – Where your business is located is actually a big factor in your premium. If you work in a city with a high claim rate or significant legal expenses, be prepared for higher premiums.
  • Workforce size – The likelihood that one of your employees will make a mistake that leads to legal action increases as your workforce grows. As a result of this higher risk, your professional liability rates will increase.
  • Age of your company – Newer businesses can anticipate paying more for professional liability insurance than larger, more established businesses. But as your company grows in expertise, your insurance premiums should go down, assuming you continue to have no claims.
  • Claims history – For insurers, a history of prior professional liability claims is a risk. Risks mean higher premiums. 

 

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Ways to Save on Professional Liability Insurance

You have no control over certain professional liability cost factors, such as industry and expertise level. However, there are other ways to reduce the overall cost of your insurance:

 

  • Pay your premium in full – Typically, insurers will give you a discount if you pay your annual premium all at once rather than on a monthly basis.
  • Change your deductible and coverage limits – To reduce your overall costs, choose a larger deductible or less coverage. Just be sure your insurance has enough coverage to protect you from potential claims and that your deductible is reasonable.
  • Bundle your policies – To save money on all of your insurance, bundle your professional liability policy with other commercial insurance protection. Most insurance carriers will discount policies when you buy them together.

 

How to Avoid a Professional Liability Claim

While professional liability insurance provides financial security in the event that lawsuits are brought against your company, it’s always safer to prevent claim situations than to let insurance handle the fallout from a dispute. There are a few extra precautions you can take to avoid these claims. For example: 

 

  • Strengthen your processes and procedures – It will be easier to guarantee that the work performed is of a high standard and that the possibility of errors is lower if there are extensive plans and supervision in place.
  • Ensure there is strong communication between you and your clients – Making sure your contracts and agreements are clear and detailed keeps everyone on the same page. This reduces the chance of misunderstandings. 

Being careful during business operations and constantly communicating with your clients won’t guarantee that you never have a claim. But it can certainly help reduce the possibility of having one.

 

FAQS

  • Can I get professional liability insurance in a business owner’s policy?

No, a typical business owner’s policy includes coverage for property, business interruption, and general liability. A separate policy for professional liability insurance would be necessary.

 

  • Do I legally need to have professional liability insurance?

In most circumstances, the law does not require professional liability insurance for small businesses. Professional liability insurance is only necessary for some professions, such as law and medicine. To find out what kinds of small business insurance your company must have, research the regulations in your state.

 

  • Will my professional liability policy cover part-time employees or contractors?

Most of the time, yes, your PLI will cover your part-time employees and subcontractors. Make sure to specify that you’ll need this kind of coverage when you request a quote.

 

  • Do I really need professional liability insurance?

Your company needs professional liability insurance if you offer clients a professional service or expert opinion. Professional liability insurance is clearly necessary for many occupational areas. Including those like law and medicine, but there are additional fields that you might not expect. Professional liability insurance can help advertising companies, IT consultants, and beauty professionals reduce the risks associated with giving clients and consumers advice.

 

How to Find Professional Liability Insurance

Generally speaking, all major insurance companies offer professional liability or errors and omissions insurance. If you already have business insurance, inquire with your carrier about the possibility of expanding your coverage to include professional liability. 

 

Your best bet, though, is to work with an insurance agent. EZ’s agents are highly trained and work with the top companies in the nation. We can compare all of your policy options while working with your budget to get your company all the coverage it needs. For a free quote enter your ZIP code below or give us a call at (855)-694-0047 to be connected directly to one of our agents today.

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What is Product Liability Insurance?

Product liability insurance shields businesses against claims that arise when products they manufacture, distribute, and sell cause personal injury or property damage to a third-party. This type of coverage is crucial for reducing the monetary risks associated with defective, dangerous or harmful products. Whether the problem stems from a product’s faulty design, a production error, improper labeling, or lack of warnings and/or instructions, product liability insurance is there to help cover the associated costs.

 

Product liability insurance exists both as a part of general liability coverage, as well as its own policy. Most commonly covering costs associated with legal defenses and settlements, the coverage enables business owners to meet industry standards while also providing peace of mind when it comes to daily operations. 

What Does Product Liability Insurance Cover?

Product liability insurance covers businesses against financial ramifications when a product that they developed, distributed or sold causes harm or damage to another party. Specific areas of coverage include: 

  • Bodily Injury (including burns, allergic reactions, bone fractures, choking, and lacerations, internal damage, dismemberment, and much more).
  • Illness/Infection (caused by bacteria, parasites, foodborne germs or viruses).
  • Death
  • Property Damage (such as structural damage, damage to personal items, vehicle damage, or chemical contamination).
  • Legal Defense (including court costs, attorney fees, judgments and settlements— whether or not you’re found liable). 
  • Global Coverage (some policies even cover businesses who sell products internationally, if a mishap occurs). 
  • White-Labeled Products (if you buy from a manufacturer or wholesaler, and relabel your products, you’ll still be covered). 

While no one expects to be involved in a lawsuit, the simple fact is that they happen. Your business is your livelihood, so don’t leave anything up to chance. By safeguarding your company against legal fees, medical bills, property repairs and more, you’ll be able to focus on what’s most important—running your business. 

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What Doesn’t Product Liability Insurance Cover? 

While product liability insurance is extremely valuable to small businesses, and businesses of all sizes for that matter, it comes with some limitations. Here are some of the most common exclusions:

 

  • Product Recalls: Policies don’t cover the costs associated with removing faulty products from the market such as product disposal, consumer notification or shipping expenses.
  • Intentional Negligence: If there is a known defect in the product, or an intentional failure to alert the public about product safety concerns, costs will not be covered. 
  • Injured Employees: Product liability insurance does not apply if a product injures one of your own employees. Instead, a workers’ compensation policy would cover this situation. 
  • Damage to Company Property: Product liability insurance only covers damage caused to a third-party’s property. If your own property is damaged, you’ll need property insurance to recoup losses associated with damaged equipment, buildings or inventory. 
  • Professional Services: If a problem arises due to a professional service that you offer as opposed to a product, your product liability coverage will not suffice. Instead, you’ll need professional liability coverage, also known as errors and omissions (E&O) insurance. 
  • Visitor or Vendor Injuries at Your Business: If someone is visiting your business location and sustains an injury, you’ll need general liability insurance to be sufficiently covered. 

 

It’s crucial to gain a full understanding of the exclusions and limitations of your particular policy. If you’re unsure about the gaps in your coverage, be sure to talk with your insurance advisor about additional policies, to ensure your business is protected from all angles. 

 

How Does Product Liability Insurance Work?

While we all hope our businesses are never involved in a product-related incident, if one does happen to occur, it’s important to understand the process. Here’s a brief overview of a typical claims process: 

 

  1. Filing a Claim: After an incident takes place, you’ll want to immediately contact your insurance provider and file the claim. 
  2. Investigation Period: After the claim is filed, the insurance company will take time to investigate the claim. During this period they will review any relevant documentation, and gather additional evidence to uncover the extent and cause of the damage or injury.
  3. Payouts/Settlements: If the insurer determines that the claim is valid, they will either reach an agreement with the affected third-party, or if required, pursue legal action. Any payments used for settlement will compensate for medical expenses, legal fees and other associated costs. 

Who Needs Product Liability Insurance? 

If your company makes, sells, distributes, or imports products, product liability insurance is essential to operation. If a flaw in a product you offer results in physical harm or property damage, you run the risk of being held liable, even if your business didn’t manufacture it.

 

  • Manufacturers: Legal risks arise from problems in product design, factory-related mishaps, or not enough testing before launching a product. 
  • Distributors and Wholesalers: Companies involved in handling bulk goods can still face liability risks, if a product causes harm down the line. 
  • Retailers: As mentioned, retailers are commonly sued over faulty items even when other businesses manufactured the goods. 
  • E-Commerce Businesses: Online retailers, as well as digital stores that sell other vendor’s products can incur blame for defective or mislabeled products. 

Real-World Examples of Product Liability Risks

  • Toy Distributor: A company that distributes children’s toys unknowingly sends out a shipment of toys that contain high levels of lead paint, which is known to be toxic and cause potential health risks. Even though the company didn’t produce the toys, they are still held liable. 
  • Candle Shop: A locally owned and operated business that makes candles, accidentally sold a batch with wick defects. This particular defect is causing candles to burn unevenly and resulted in a customer’s furniture catching on fire. Now they are being brought to court over the damages. 

Why is Product Liability Insurance Important for Small Businesses? 

Even with the best quality-control measures in place, product defects still occur through design errors, manufacturing problems, or incomplete labelings. When a customer suffers an injury or their property is damaged due to a faulty product, your business risks paying high costs, like steep medical expenses, legal fees or settlements. 

 

Product liability insurance is especially important for small businesses as they tend to lack the necessary capital to pay for expensive settlements, or court cases out of pocket. With the proper product liability policy in place, businesses can remain protected without jeopardizing their financial stability. It’s important to keep in mind that many product-related claims only require proof of a defective product. This means that even if your business didn’t directly cause the issue with the product, you can still be held liable. 

 

Additionally, while product liability insurance isn’t generally required by law, certain manufacturers, distributors and even e-commerce platforms require businesses working with them to carry this policy. In short, without product liability insurance, you could be stunting your company’s growth, since the lack of a policy may limit your ability to form partnerships and meet contractual obligations.

How Much Does Product Liability Insurance Cost? 

Product liability insurance costs an average business anywhere between $500 to $1600 per year. For small businesses, the average monthly cost is about $99. A main factor in determining the cost of your policy depends on the type of business you operate and the risk-level of that business. For instance, home-based businesses tend to see lower premiums while manufacturers, dealing with production on a daily basis may pay more.

 

Here is a full list of factors contributing to the cost of a product liability insurance policy: 

 

  • Type of Product: Products that present higher risks to consumers like medical equipment or machinery, generally lead to higher insurance premiums. 
  • Volume of Products Sold: The more products you sell, the higher chance there is of a liability claim occurring. Therefore, more products sold tends to equal higher premiums.
  • Claims Record: Companies which have never faced a product-related claim will generally be rewarded with lower premiums, as opposed to companies who’ve faced prior claims. 
  • Size of Operation: Small businesses like e-commerce shops or local retailers need less coverage than distributors or manufacturers with large facilities. 
  • Coverage Amount: The selected limits of your policy affect how much you’ll pay on a monthly and annual basis. 
  • Location: The state and local laws of your location may affect the overall cost of your insurance premiums. 

Product Liability Insurance VS. General Liability Insurance

Product liability insurance and general liability insurance are both vital in protecting businesses from legal claims, but they have different uses and limitations.

 

What’s the Difference? 

As mentioned, product liability focuses specifically on claims relating to personal injury or property damage arising from products that businesses sell, manufacture or distribute. 

 

General liability on the other hand, covers a wider range of claims such as third-party injuries or property damage caused on a third-party’s property, as well as advertising and reputation damage as a result of general business operations. 

Does General Liability Provide Product Liability Coverage? 

The short answer is—sometimes. General liability insurance policies do oftentimes provide some level of product liability coverage, but other times it will need to be purchased as a separate policy. If you’re unsure about what your policy includes, just ask the insurance agent that you’re working with. This ensures that there are no glaring holes in your protection plan. 

FAQs

If I don’t manufacture the products I sell, do I still need product liability insurance?

Yes! If someone gets hurt or their property is damaged due to a product you sell, you can still be held liable, even if you don’t manufacture anything. While the manufacturer created the product, since you are part of the supply chain, you may face legal claims and be held responsible, if the court determines that you didn’t ensure the product was safe before selling it. 

 

How much product liability coverage does my business need? 

The amount of coverage that your business will need depends on a variety of factors such as the risk-level of your products, the volume of sales you make on a yearly basis and the industry you’re a part of. While we encourage everyone to consult with our insurance advisors for a policy tailored to your needs, most small businesses obtain a $1 million per-occurrence limit and a $2 million aggregate limit to start.

 

What if I discover a defect in my product before any claim is made? 

If you find a defect in one of your products before a claim is ever made, it’s important to act as quickly as possible. This may include issuing product recalls, alerting your base of customers, and contacting your insurer. While product liability insurance doesn’t cover product recalls, your provider should be able to offer you supplemental coverage options, or provide you with the next steps to resolve the issue. 

 

Can I combine product liability insurance with other coverages?

Yes! Many insurance providers offer product liability with your general liability insurance policy. With that being said, depending on your business, the risk involved, and the insurer that you’re dealing with, you may need to purchase a standalone product liability policy. 

 

Get Product Liability Coverage with EZ.Insure 

Choosing the best product liability insurance policy for your business’s needs doesn’t have to be difficult. To make sure no box is left unchecked, visit EZ.Insure!

 

EZ.Insure specializes in helping small businesses like yours protect themselves from the unexpected risks that life has to offer. With the help of our side-by-side plan comparison tool, instant access to quotes, and live expert assistance, you can find the perfect product liability policy in no time.

 

Don’t go uninsured any longer! Enter your ZIP code below, or give us a call at (855)-694-0047 to get started!

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What is Business Interruption Insurance? 

Business interruption insurance (also called business income insurance) safeguards companies from financial losses due to unexpected events that cause businesses to halt their operations. Natural disasters, fires and theft are all events that can leave organizations in shambles without the proper protection plan in places. 

 

Business interruption insurance works to mitigate these financial risks by replacing lost income while shut down. Additionally, this type of policy covers operating expenses such as rent, power bills, employee wages, bank loans and taxes. 

What Does Business Interruption Insurance Cover? 

If your business is forced to shut down due to an unforeseen circumstance, the last thing you want to worry about is not being able to pay the bills, or your employees for that matter. Here is a list of the key areas that are covered by business interruption insurance:

 

  • Lost Revenue: Any income you would have earned if your business was running normally.
  • Employee Wages: Ensures your staff continues to receive payment, and helps avoid layoffs during the closure. 
  • Ongoing Expenses: Any essential expenses that keep regularly keep your business afloat such as rent and utilities (this varies from policy to policy).
  • Relocation Expenses: Covering moving expenses to your temporary location, and the cost of rent. 
  • Taxes: Tax obligations are taken care of while operations are halted.
  • Loan Payments: Keeping up with payments helps to avoid defaults. 
  • Recovery Costs: Payments contribute to efforts needed to get up and running again such as marketing.
  • Training Costs and Commission: The cost of retraining personnel is generally covered, helping businesses recover with ease.  

What Isn’t Covered by Business Interruption Insurance?

Most business interruption policies do not cover the following assets or losses: 

 

  • Vehicle Damage (commercial auto insurance is needed).
  • Damaged Inventory or personal items (usually covered by commercial property insurance).
  • Undocumented revenue losses.
  • Electronic data (unless your policy explicitly states otherwise, cyber insurance is needed).

 

What Events Does Business Interruption Insurance Cover? 

Business interruption insurance usually covers the following disruptive events: 

 

  • Fires
  • Windstorms
  • Hailstorms
  • Lightning Damage
  • Water Damage (not including flooding)
  • Theft
  • Explosions
  • Vandelism
  • Vehicle Damage
  • Equipment Breakdown
  • Civil Disruptions
  • Supply Chain Problems

What Events Are Not Covered By Business Interruption Insurance? 

  • Flooding/Mudslides (flood insurance is required)
  • Earthquakes (earthquake insurance is required)
  • War-Related Damages
  • Pandemics or Disease Outbreaks
  • Power Outages (that originate off-site)
  • Gradual Deterioration (wear and tear)

How Much Does Business Interruption Cost for Small Businesses?

The average cost of a business interruption insurance policy for small businesses varies based on the following factors: 

 

  • Company Size: The more employees you have, the more wages will need to be covered in the event of an interruption. 
  • Industry: Industries involving high-risk procedures or equipment may face higher rates. 
  • Location: Geographic areas prone to natural disasters or high crime rates may face increased costs. 
  • Revenue: The more income your company needs to be covered, the higher your premium will be. 
  • Policy Limits: While higher coverage limits offer more protection, they tend to increase the costs of premiums. 

 

On average, the cost of a business interruption policy for a small business ranges between $500 and $2000 per year. To get a free quote tailored specifically to your business, click the button below. 

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How Does Business Interruption Insurance Work? 

Here’s a quick overview of how a business interruption insurance plan works: 

 

  1. Triggering Event: Coverage is activated after a covered event (event included in your policy) takes place.
  2. Restoration Period: Policies typically include a 48 to 72 hour waiting period before the coverage actually kicks in and losses start to be settled.
  3. Claims Process: After the restoration period, you’ll then file the claims with your insurance provider, providing all details of damages and financial losses.
  4. Investigation: The insurer generally investigates the business site and reviews any financial records to determine the extent of damage, and the amount of compensation you’ll receive. 
  5. Payout and Recovery: Lastly, the insurance company will compensate you for the lost revenue and any other applicable expenses, to help get your business up and running again. The length of time that you will receive funds depends on the assessment made by the insurance adjuster, but most policies cover between 3 to 12 months. With that being said, coverage can be extended if necessary. 

Why is Business Interruption Insurance Important for Small Businesses? 

Let’s face facts. Small businesses tend to have less capital on hand than bigger, more established corporations. Because of this, an unexpected shutdown can be disastrous for small businesses, in many cases causing them to layoff employees, lose customers, miss payments or worse, shut down their entire operation. 

 

When a business is flourishing, monthly expenses may seem like an afterthought, but when a disaster takes place, they add up very quickly. With a comprehensive business interruption plan in place, you can rest assured knowing that your business will recover quickly and come back stronger than ever. 

How Much Business Interruption Insurance Do Small Businesses Need? 

While the amount of coverage that a businesses needs varies greatly and can be difficult to determine, consider the following when estimating your company’s insurance needs: 

 

  • Identify Your Average Monthly Revenue: This exercise gives you an idea of the total income that’ll need to be replaced during a shutdown.
  • Estimate Your Monthly Operating Expenses: Could include rent, utilities, payroll, taxes and loans. 
  • Estimate the Total Recovery Time: Ask yourself how long you think it would take to get your business up and running again after an event.  

 

Now take the average monthly revenue and multiply it by your estimated recovery time (for example, if your monthly revenue is $20,000, and you think it will take you 12 months to recover, you’d calculate $20,000 x 12). Do this exercise again with your monthly operating expenses. Once this is complete, get in touch with a licensed insurance agent, who will help you find a tailored policy based on those profits, expenses and estimated down-time. 

FAQs

Is business interruption insurance purchased as a standalone policy? 

Business interruption insurance is not usually sold as a standalone policy. Instead this coverage type is commonly purchased as part of a Business Owners’ Policy (BOP), which combines general liability insurance, commercial property insurance and business interruption insurance. Another option is to purchase it as an add-on or endorsement to a commercial property insurance policy or a general liability policy alone. Combining multiple types of insurance on policy, not only protects your company from multiple angles, but also tends to come with discounts.

 

What is an example of small business interruption insurance? 

Business interruption insurance kicks in when a business interruption event takes place causing physical property loss, causing the business to shut down operations. Common examples of interruptions include fires, cyber attacks or theft. 

 

How long does business interruption insurance last?

Business interruption insurance provides monetary relief for businesses during the “restoration period” or time needed to repair or rebuild the damaged property. In general, this period usually lasts up to 12 months, but could be extended under certain circumstances. 

 

Does business interruption insurance cover pandemics or government shutdowns?

Business interruption insurance policies usually do not cover government shutdowns or pandemics. To ensure that you understand what is covered and what isn’t, view your policy details or reach out to your insurance agent.

Get Business Interruption Insurance Today with EZ.Insure

EZ.Insure understands how difficult it is for small businesses to recover after experiencing an event that forces a temporary shutdown. Instead of waiting for the unexpected to occur, be proactive and get insured today!

 

Our easy-to-use platform offers free quotes tailored to your business needs, a side-by-side plan comparison tool, and 24/7 expert assistance from our licensed insurance agents. Getting insured may seem like a daunting process, but with the help of EZ.Insure it doesn’t have to be!

 

To get started and receive your free, instant quote, click the button below or call us at (855)-694-0047.

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What is Commercial Property Insurance? 

Commercial property insurance protects business owners and their companies from financial losses if their property and/or assets are damaged or lost. Common assets that are generally covered by commercial property insurance include buildings, furniture, fixtures, equipment, and more. No matter how big or small a business is, commercial property is a vital piece of protection, ensuring that companies recuperate quickly in the event of an incident. 

What Does Commercial Property Insurance Cover?

Commercial property insurance focuses on the protection of physical assets from loss, damage or destruction, if a covered incident takes place. Here is a breakdown of the most common events causing loss or damage that are covered by commercial property insurance: 

 

  • Explosions
  • Fires
  • Smoke Damage
  • Storms
  • Wind
  • Hail
  • Water Damage (does not include flooding)
  • Equipment breakdown or malfunction
  • Theft
  • Vandalism
  • Riot/Civil Commotion
  • Vehicle Damage

 

If one of these events takes place on your property, the following types of assets are generally covered: 

 

  • Buildings and/or structures owned by the business
  • Personal property (laptops, computers, furniture, etc.)
  • Inventory 
  • Supplies
  • Documents
  • Equipment/Machinery 
  • Landscaping
  • Signs 
  • Fences 

What Doesn’t Commercial Property Insurance Cover? 

The following events and assets are usually not covered by commercial property insurance: 

 

  • Flood Damage (requires a flood insurance policy)
  • Earthquake Damage  (requires a separate policy)
  • Hurricane Damage (supplemental coverage such as flood insurance is required). 
  • Employee Injury (workers’ compensation insurance is required). 
  • Employee Theft 
  • Intentionally Caused Damage
  • Routine Damage (wear and tear)
  • Vehicle Damage (commercial auto insurance is required)

Why is Commercial Property Insurance Important for Small Businesses? 

A company without commercial property insurance risks facing major financial issues if property and/or items get damaged during a covered event. This valuable coverage offers several advantages:

 

  • Pays For Expensive Repairs and Replacements: The policy pays to fix or buy new company assets that break down, get destroyed or lost.
  • Enables Businesses to Stay Open: By covering the cost of equipment or repairs, businesses avoid extended periods of down time. 
  • Peace of Mind: Owners and employees can focus on running a successful operation, instead of worrying about unforeseen events and the financial impact the events could cause without the presence of commercial property policy.

Who Needs Commercial Property Insurance?

A better question might be—who doesn’t need commercial property insurance? But in all seriousness, any business that owns, rents or leases physical space or valuable business assets should invest in a commercial property protection plan. Here’s a list of some businesses that commonly obtain commercial property insurance:

 

  • Restaurants, food trucks, and caterers 
  • Retail Stores
  • Office-Based Businesses
  • Beauty businesses
  • Professional Services
  • Fitness Studios and Gyms
  • Warehouses
  • Distribution Centers
  • Any Small Business with expensive inventory/equipment

If you own, rent or lease business space, use expensive machinery and equipment, or simply depend on physical property to run a successful operation, this coverage is essential to avoid  monetary setbacks in the case of an unexpected, damaging event. 

How Much Does Commercial Property Insurance Cost for Small Businesses? 

On average small businesses usually pay between $500 and $2000 annually. There are a number of factors contributing to the cost of policy such as: 

 

  • Location: Areas deemed more dangerous may cause premiums to increase. This includes frequent natural disasters or high crime rates. 
  • Type of Assets and/or Property: The bigger the building or property, and the more valuable the assets, the more expensive the premium will be. Additionally, older structures tend to cost more to insure as opposed to more recently built buildings. 
  • Number of Facilities: It will cost more to insure a property with multiple buildings or facilities. 
  • Safety Features: Properties including safety features like smoke detectors or security systems may be rewarded with lower rates.
  • Building Material: Buildings constructed with certain materials such as fire-resistant materials will generally cost less to insure. 
  • Industry: High-risk industries like manufacturing or construction may see higher prices. 
  • Deductibles and Coverage Limits: Higher deductibles usually lower premiums costs, while higher coverage limits increase premium costs. 
  • Claims History: Businesses with a history of property claims may see higher rates.

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How to File a Commercial Property Insurance Claim 

If an incident occurs causing your business property and/or assets to be damaged, destroyed or lost, it’s important to take the following steps: 

 

  1. Document the Damage: Take clear photos of the damage, and gather any other evidence that provides proof of the event which occurred. Keeping detailed records is key. 
  2. Contact Your Insurer: Get in touch with your insurance provider as soon as possible. The earlier you report the incident, the better. 
  3. Provide Proof: Send all relevant documents to the insurer. This includes both proof of the damages incurred, as well as receipts and bills showing the value of the damaged or lost items. 
  4. Get Assessed: The insurance adjuster will need to visit your property to assess all losses or damages in person. 
  5. Receive Payment: Once the claim is approved, you’ll receive funds to fix or replace all affected items or property. 

FAQs

Can Commercial Property Insurance Be Combined with Other Coverage? 

Yes, it is quite common for commercial property insurance to be combined with other protections to form a comprehensive plan. Common plan combinations include: 

 

  • Business Owners’ Policy (BOP): Combines business interruption insurance, general liability, and commercial property coverage. 
  • Commercial Package Policy (CPP): Gives businesses the option to customize their package with a number of coverage options to protect against common property and liability risks. 
  • Equipment Breakdown Insurance: When combined with commercial property, it adds an extra level of protection, covering repairs or replacements to specific equipment like HVAC systems, boilers, pressure equipment, security systems and more. 

Combining policy is a great way to ensure there are no holes in your protection plan, while simultaneously offering cost savings. 

 

Does Commercial Property Insurance Cover Leased Property? 

Commercial property can cover lease property. Whether or not this is the case for your leased property depends on the specific terms of your lease agreement. With that said, in many cases the owner of the property is responsible for insuring the structure, while the tenant is responsible for insuring their businesses personal property. 

 

How Can I Lower the Rate of My Commercial Property Insurance?

Here are some cost saving measures you can take to ensure that you get the best price on your commercial property insurance policy: 

 

  • Set Up Security Defenses: Investing in things like security cameras or fire hazard equipment to lessen potential hazards could reduce your premium. 
  • Combine Policies: Consider purchasing a business owners’ policy, or another combined insurance package, to gain supplemental protection at a reduced price. 
  • Select a Bigger Deductible: Increasing your deductible usually reduces monthly premiums. 
  • Regularly Assess and Review Coverage: Review your current coverage on an annual basis to ensure that you’re not overspending for coverages that aren’t necessary to your operation. 

 

How Do I Choose the Right Commercial Property Insurance Plan? 

When deciding on which policy to choose it’s important to take account of the following: 

 

  • The specific risks associated with your industry and business.
  • The total value of all combined assets, such as buildings, equipment and inventory.
  • Coverage limits, deductibles and premiums that fit your budget. 
  • Whether or not your business requires additional coverage options like protections against hurricanes, floods or earthquakes. 

While all of these factors are crucial to consider, we encourage all business owners to consult with an insurance professional to ensure all your needs are met, and the cost of protection stays within your budget. 

Get Commercial Property Insurance Today, with EZ.Insure!

EZ.Insure is a leader in the small business and commercial insurance space for a reason. Our simple platform makes it easy to compare coverage options side by side, receive free quotes, and work with a licensed agent, so you can secure the best policy tailored to your business needs. Don’t wait for an unexpected event to get in the way of your business’s success, instead, get covered today!

 

To get started, simply enter your ZIP code in the box below or give us a call at (855)-694-0047 to get your free quote!

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Keeping your business’s doors open depends on a number of factors and maintaining your business’s property and equipment is a huge part of the equation. If company assets are damaged in a fire or natural disaster, without sufficient insurance coverage it can be difficult for businesses to recover. This is where hazard insurance comes in.

 

Table of Contents 

What Is Hazard Insurance? 

Hazard insurance is a type of business coverage that protects commercial properties and assets against physical damage stemming from storms, fires, vandalism and theft. If a business suffers losses due to one of these events, hazard insurance helps pay for replacing or repairing buildings, offices, equipment, and inventory. 

 

It’s important to note that hazard insurance is typically a portion of a broader commercial property insurance policy. While commercial property insurance provides a more comprehensive coverage, oftentimes providing coverage for operational disruptions,  hazard insurance focuses solely on protecting a business’s physical structure and assets. 

What Does Hazard Insurance Cover?

Hazard insurance covers both the building that your business owns or rents, as well as the equipment that it uses. Depending on your policy, hazard insurance will generally cover the cost to repair or replace the following items:

 

  • Personal property
  • Tools and equipment
  • Inventory
  • Furniture
  • Computers
  • Accounts receivable
  • Documents
  • Outdoor landscaping

 It will cover damages to the above due to the following types of events:

 

  • Fire and smoke damage
  • Theft and vandalism
  • Some weather-related events such as hail, lightning, snow, sleet, or ice
  • Explosions
  • Aircraft or vehicles
  • Sprinkler leakage
  • Building collapse
  • Water damage (in certain specific cases)

Damages caused by floods, earthquakes, acts of terrorism, nuclear attacks, or damage resulting from war are typically not covered by hazard insurance policies. You will need a separate insurance policy to protect your business from these occurrences.

Does My Business Need Hazard Insurance?

Hazard insurance is generally not required by law. With that being said it is crucial to help cover the costs of damages if a disastrous event occurs. Without a comprehensive hazard insurance policy, owners are forced to pay for repairs out of pocket, which isn’t always possible for small business owners.  Additionally, many lenders and financial institutions require businesses to have some form of hazard insurance before issuing mortgages or loans.  

The Cost of Hazard Insurance

The price of hazard insurance will vary widely depending on a number of factors, including:

 

  • The age of your building/property – If the workspace that you own or rent is older, you’ll typically pay higher premiums because repairs to older properties tend to be more expensive.
  • The value of your building/property – The higher the total value of your assets, the higher the premium for this coverage will be.
  • Whether you choose a cash value or replacement cost policy – With a policy that pays out based on the actual cash value of your property, your payout will be determined by how much your property was originally purchased for before it was damaged. But if you have a policy that pays out based on replacement value, you will be covered for how much it would cost to buy a brand new version of the item that was damaged. Because of the effects of depreciation, cash value insurance is typically more affordable than replacement value insurance.
  • Coverage limits – As is the case with the vast majority of insurance policies, your monthly premiums will go up as you add more coverage.
  • Lender requirements – A lender may require that you have a certain amount of property insurance coverage before they will approve your application for a loan. The more insurance your lender requires, the larger your premium will be.

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Hazard Insurance for a SBA Loan

The Small Business Administration (SBA) helps small businesses get the credit they need by putting the government’s name on loans made by commercial lenders. The lender provides the loan, and if the borrower doesn’t pay back the loan, the SBA will cover up to 85% of the loss. 

 

To get a small business loan from the SBA, you need to show that you have hazard insurance. Having this type of policy shows that you own real assets that can be taken if you can’t pay back the loan. For example, if a construction company wants to borrow money to buy a piece of equipment but can’t pay back the loan, the lender can take ownership of the equipment.

Types of Hazard Insurance SBA Might Require

In order to be eligible for a loan from the SBA, you will have to show that your business has adequate insurance coverage. This could mean having general liability coverage as well as commercial property insurance/hazard insurance. Keep in mind that depending on the kind of loan you want to get, the Small Business Administration might require you to have other types of insurance coverage, such as workers’ compensation.

 

Specifically, the Small Business Administration requires the following when it comes to hazard insurance:

 

  • The minimum required coverage amount is 80% of loan principal.
  • Your business’s name must appear on the insurance policy.
  • Your DBA name must be included in the policy if you use one.
  • You must show proof of the required insurance within 12 months of receiving your loan. If your business does not already have it when you apply for your loan.

Is Hazard Insurance Tax Deductible?

The Internal Revenue Service considers business insurance premiums to be an ordinary and necessary business expense. So, yes it can be tax deductible. But there are other factors to think about when determining if your hazard insurance is tax deductible.

 

If you have a home-based business, you may be able to deduct some of your operating costs from your taxable income. Insurance premiums can fall into this category, along with utilities and home office essentials. For instance, you can deduct half of your annual hazard insurance premiums if your home is used for business purposes in excess of 50% of the time.

 

If your company suffers losses in an area where a federal disaster declaration has been issued, you may be eligible for deductions. If you have hazard insurance and your insurer only pays a portion of your claim, for instance. You can deduct the amount of your claim up to $500 per incident.

FAQs

Do I need hazard insurance if I run a home-based business?

Yes, even if you run a home-based business, you’ll likely need a business hazard insurance policy. Homeowners insurance usually does not cover business-related property, or if it does, the policy limits on these assets are very low. To ensure that all of your business property is protected, it’s suggested to purchase a hazard or commercial property insurance policy, even if you already have a homeowners policy. 

 

How much does hazard insurance cost for small businesses? 

The cost of a hazard insurance policy varies based on factors such as location, equipment value, industry, property value, building age and more. With all that being said, on average small businesses pay about $67 per month or $800 per for a comprehensive policy. 

 

Does hazard insurance cover natural disasters like floods and earthquakes? 

Most hazard insurance policies do not cover floods and earthquakes. If your business is located in an area where these types of disasters are prevalent, you’ll need to purchase a separate flood insurance or earthquake insurance policy. 

 

Get Hazard Insurance Today with EZ.Insure!

At EZ.Insure, our insurance agents work with the leading insurance companies across the country to ensure that you have access to the best coverage options for your business and its employees. In fact, we can save you hundreds of dollars annually by tailoring our search to find you exactly what you need, at the best price possible. To get a free quote, simply enter your ZIP code in the box below or give us a call at (855)-694-0047.

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Workers’ Comp Exemption Explained

Workers’ Compensation is an essential type of commercial insurance coverage for most businesses, but not everyone is required to have it. 

 

To give you a better understanding about what workers’ comp exemptions are, we’ll be discussing: 

 

  • The professionals who may qualify for an exemption.
  • Varying state laws in regards to exemptions.
  • How to file for an exemption.
  • The risks of opting out of.

Let’s take a look!

 

A construction worker wearing a safety vest and helmet, accompanied by text on a blue background that reads "Workers' Comp Exemption Explained"

Common Workers’ Comp Exemptions

Workers’ compensation coverage is an essential type of commercial insurance, protecting employees against the costs involved with workplace injuries. While it is legally required in almost all 50 states, certain businesses and individuals are allowed to opt out. Doing so can help small businesses in particular save money, but also comes with some risks.

 Now let’s start by exploring the most common exemptions: 

Infographic titled "5 Jobs That Might Not Need Workers' Comp Coverage" featuring a colorful header with illustrations of diverse professionals.

Independent Contractors and Sole Proprietors 

Since sole proprietors and independent contractors work for themselves, they have no employees. Because of this fact, many states allow them to opt out of workers’ compensation requirements.

Corporate Officers and Owners 

High-level executives such as owners of large corporations and corporate officers oftentimes qualify for a workers’ comp exemption. It’s important to note that in this situation, the executive alone won’t receive workers’ compensations benefits, but normal employees are still required to. 

Family Members in Family-Owned Businesses 

In some states, immediate family members who work for a family business may be able to opt out of workers’ comp requirements. For example, a spouse or child who 

works for their family’s restaurant may be eligible for an

exemption in many cases. 

Seasonal or Casual Workers

For some professions, work tends to be short term depending on the industry, specific season, or special circumstances. Many states allow workers, who are  seasonal or temporary, to opt-out of workers’ compensation requirements. In these situations it’s important to read about the industry-specific requirements in addition to the state requirements. 

Agricultural Workers

In some states farm laborers and other agricultural workers can be exempt from workers’ comp requirements. Similarly to temporary workers, it’s important to read up on specific agricultural laws in your state to make sure you’re legally compliant. 

State-by-State Workers’ Comp Exemption Variations 

As briefly mentioned, each state has its own separate laws in regards to workers’ compensation requirements. While we won’t go through every state’s specific laws, you can find more detailed information by looking at our Workers’ Compensation Insurance Rates and Coverage by State overview.

 

Here are some examples of states with unique workers’ compensation laws: 

 

  • Texas: Private employers don’t have to provide workers’ compensation coverage at all (they are the only state with this law).
  • Florida: While construction workers usually face stricter requirements than in many other states, sole proprietors can apply for exemptions. 
  • California: There are very few exemptions allowed. One of the only types of professionals who may become exempt with specific circumstances are corporate officers. 
  • New York: While sole proprietors are exempt, many specific types of contractors must be covered. 
  • Pennsylvania: Unless they employ other people, sole proprietors are exempt.

*It’s important to always check with your state’s labor and workers’ compensation board to fully understand the specific exemption requirements for your state and industry. 

How to File for a Workers’ Comp Exemption 

  • Apply: After finding out if you and your business are eligible for workers’ comp exemptions, you’ll need to apply through your state’s labor department or workers’ compensations board. This is usually as easy as filling out a lengthy application, but sometimes requires a sworn affidavit.
  • Required Documents: During the application process you’ll likely need to provide some specific documentation. Standard document requirements include proof of business ownership, proof of family relationships (for family-owned businesses), or proof of your independent contractor status. 
  • Exemption Renewal: Most states require you to renew your workers’ compensation on a periodic basis. For some states, it’s every year, for others, it’s every couple of years, so be sure to check with your labor board for your local requirements. 

Risks of Obtaining a Workers’ Comp Exemption 

  • Financial Risks: While opting out of your state’s workers’ compensation requirements could save you money upfront, you run the risk of facing expensive out-of-pocket costs if you or an employee gets injured on the job. 
  • Legal Risks: If you fail to cover an employee who is in fact required to have workers’ compensation coverage you will face steep fines and/or other legal penalties. The same consequences apply if you incorrectly claim an exemption. 

If you are eligible for an exemption it’s important that you take the time to weigh your options. While we encourage you to play it safe and get some level of workers’ compensation for your business, it is a personal choice and each option has pros and cons. 

Why You May Want Workers’ Comp, Even if You Are Exempt

A window cleaner suspended on a harness, wearing a safety helmet and using professional equipment to clean a high-rise building.

  • High-Risk Professions: If you work in a high-risk industry such as construction, it’s likely worth it to obtain a workers’ compensation policy even if you’re not legally required. This is mainly because the risk of injury is so much higher in these professions in comparison to other ones. 
  • Protect Your Assets: A workplace injury could result in a lawsuit costing hundreds of thousands of dollars without a workers’ compensation policy in place. In this dreadful situation, many business owners simply cannot afford to keep their company afloat, while also paying the settlement. 
  • Employee Trust: Having a comprehensive workers’ compensation policy in place shows your employees that you truly care about their health and well-being. This helps to instill a sense of trust and loyalty among team members. 

Learn More About Your Options at EZ.Insure 

Workers’ compensation insurance is a crucial type of coverage that extends to employees by covering the costs associated with workplace accidents. While there are some benefits of opting out of your state’s requirements, it’s important to first weigh the pros and cons before making a decision. 

 

To learn more about workers compensation coverage and other key business protections, visit our full resource library. 

 

If you’re interested in taking the next step to cover your team, EZ.Insure also provides free quotes, and expert help from licensed insurance agents. To get started, simply fill out the form on the righthand side of the screen or call us at (855)-694-0047.

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