You’re likely to be one of the more than 3.7 million companies that have received a Small Business Administration EIDL loan. Loans greater than $25,000 will require proof that you have Hazard Insurance. We have been asked many times by our clients about this insurance. They want to know what it is, how to get it, and where to find it.
What is Hazard Insurance for a Business?
Business hazard insurance is a type of small-business insurance that covers the building where your company is located. It can be leased or owned. You can also use it to protect your equipment. This coverage is also known as commercial property insurance.
You may be eligible for hazard insurance to cover the costs of replacing or repairing your vehicle.
- Personal property
- Instruments and equipment
- Receivables (accounts receivable)
- Documents of great worth
- Outdoor landscaping includes fencing and other features.
SBA EIDL Loans
Let’s first take a look at the EIDL loans from SBA. These loans were created in response to the COVID-19 epidemic and the adverse effects it had on small businesses. EIDL loans can be obtained by small businesses in all 50 states and Washington D.C., as well as non-profit organizations. They are intended to assist these businesses in meeting financial obligations and operating costs that would have been possible if the COVID-19 pandemic hadn’t occurred.
EIDL loans cannot exceed $500,000, and all loans exceeding $25,000 require collateral. As collateral, the business’s assets can be used, including buildings, machinery, equipment and furniture. The SBA requires that loans of $25,000+ be insured with Hazard because the collateral is used.
Business Hazard Insurance and Homeowners Insurance
You may wonder if there is a difference between home-based business insurance and homes insurance. When it comes to homeowner coverage, hazard insurance covers your house and any associated buildings such as sheds or garages. You will need business hazard insurance even if your home-based company has homeowners insurance.
Do I need to have Hazard Insurance for My Business?
Hazard insurance is not required by many states. It is still a good idea to have this coverage in order to protect your company’s assets. If you don’t have this coverage, you’d be responsible for any repairs or replacements.
Do I already have Hazard Insurance?
You may. You can. There are many types of business insurance policies. Hazard Insurance is available if you have a Commercial Property insurance policy. To ensure that you have adequate coverage for your property, it is a good idea to check the coverage limits with your agent. Business Owner Policies also include hazard coverage. It’s a good idea again to discuss this policy with your agent.
Hazard Insurance is not provided by Homeowners Insurance policies. The policy only covers the owner of the home and not the business. To fulfill the Hazard Insurance requirement, you will need to have a commercial policy for your home-based company.
You must have Hazard Insurance to get an SBA loan.
The ongoing COVID-19 epidemic has impacted millions of small businesses in the United States. The Small Business Administration provides an Economic Injury Disaster Loan (EIDL) to small businesses that have suffered a temporary loss in income due to COVID-19.
If COVID-19 has affected your business and you require support, you might consider applying for an EIDL. You should carefully read the requirements. It is possible that you will need SBA Loan Insurance such as EIDL.
Visit the agency’s site to learn more about EIDLs and SBA hazard requirements.
Hazard Insurance Qualifications for SBA and EIDL Loans
The Small Firm Association requires that all businesses have property coverage in order to be eligible for a Payment Protection Program (PPP), or an Economic Injured Disaster Loan. If you are applying for an EIDL loan or a PPP loan, you will need to have general liability insurance or commercial property insurance.
What other information do you need about the SBA’s mandate regarding hazard insurance coverage?
- A minimum of 80% must be covered.
- You must insure your company (and prove that you own the business property).
- It must be mentioned on your insurance policy if you use a DBA (doing business as).
- You must receive it within 12 months of obtaining the loan.
- The 24-month period from the date you received the loan is when the first payment is due.
- For loans received by 2021, the first payment is expected.
- It is valid for 18-months from the date you received it.
These loans are available until December 31, 2021. You must also secure business hazard coverage within 12 months after receiving the cash. Talk to your insurance provider about property coverage if you require hazard insurance for an SBA/EIDL Loan. You can also contact one of our agents to get more information.
What is the cost of Hazard insurance for businesses?
Your business property insurance should provide adequate protection against dangers. How can insurance companies determine the price of your policy?
- The age of the residence
- The property’s value
- You can choose your coverage options and limits.
- No matter if you choose to replace the entire cost.