Posted on May 17, 2014
Whether big or small, all Hawaii businesses need the valuable protection of commercial insurance. Protecting businesses from the risk of lawsuits and property damage ensures that business owners can concentrate on what they do best - running their companies. Meanwhile, business insurance provides the necessary coverage that each company needs to fully handle any risks they potentially face during the course of running their business.
The State of Hawaii has two types of commercial insurance that are required for employers - temporary disability and workers compensation insurance. Both of these coverages provide benefits to employees so that whether they are hurt while on or off the job, they will be covered for medical treatment, along with temporary wage replacement or disability benefits.
Hawaii Liability Coverage
Liability insurance coverage protects companies from bodily injury or property damage claims by customers or other third parties. When a company is found legally responsible for an injury such as a slip and fall or even an employee damaging a client's property, general liability insurance will pay medical expenses for the injury and repair the damage. In the event that a lawsuit is brought against a business owner, liability coverage will also pay for legal defense fees and any court ordered award or settlement.
Other types of liability insurance include:
1) Employment Practices Liability - while workers comp and disability insurance pay for employees when they are injured on or off the job, this insurance protects companies from employee claims for discrimination, wrongful termination or harassment.
2) Professional Liability - also known as errors & omissions, this insurance will pay damages to third parties when professionals are negligent or make mistakes.
3) Umbrella Liability - when standard policy limits are not enough, umbrella policies provide additional coverage amounts over and above general liability policies. Typical coverage will add $1 million to $5 million to protect companies that have significant assets to protect from lawsuits.
Workers Compensation Coverage
Workers compensation insurance is designed to provide benefits and wage replacement when employees experience a work related injury or illness. It will also pay to retrain workers who are unable to return to their usual position. The State of Hawaii mandates that employers with one or more part or full time employees must provide workers comp coverage. Businesses may purchase this insurance through private carriers licensed to provide insurance in Hawaii, or they may opt to be self-insured. In order to become self-insured an employer must provide proof of ability to pay employee benefits and financial solvency.
Employees exempt from workers comp laws include volunteers, student workers, religious leaders, domestic workers with less than $225 in earnings per quarter as well as real estate brokers and sales people.
Temporary Disability Insurance in Hawaii
Unlike other states, Hawaii does not pay disability benefits to those unable to work. Hawaii employers are required to pay for temporary disability insurance for employees who cannot work due to non-work related injuries or illness.
Companies may either cover the entire premium cost, or they do have the option to share the cost with employees. They may not, however, deduct more than 0.5% of weekly wages with $4.51 being the maximum allowed by state law. Business owners may purchase disability insurance from a private carrier or self-insure by adopting a sick leave policy that must be submitted and approved by the Disability Compensation Division.
No matter whether a company owns their building or leases the property, commercial property insurance is necessary to protect the physical assets of the business. This vital protection covers any physical damage or loss of assets in the event of fire, theft or vandalism. When a covered event occurs, this insurance will pay to repair or completely replace the property. Not only does it cover the physical building itself but also the contents such as furniture, computers and valuable business documents.
Commercial Flood Insurance
Being that the Pacific Ocean surrounds the islands of Hawaii, the potential for flooding and tsunami damage is always possible. Severe rains and flooding can lead to catastrophic damage of business and personal property to the extent that a company might need to close for repairs. Most commercial property insurance policies do not provide coverage for damage caused by floods. A separate policy must be added to the overall business insurance protection program. This coverage can be obtained from FEMA's National Flood Insurance Program. Policy limits are available up to $500,000 for buildings and $500,000 for personal business property such as inventory, furniture and computers. Policies do not go into effect until 30 days after an application is submitted. Companies need to secure this coverage well ahead of any flood threat.
Windstorm & Hurricane Insurance for Hawaii
While most hurricanes in Hawaii occur during the season between June and November, they can really strike at just about any time. Hurricane and windstorm damage is not covered by commercial property insurance in the state of Hawaii. Property owners must purchase separate policies to cover damages from these events. It is always best to review existing policies to determine what weather related events are specifically covered. Additional coverage may be purchased for those events that have the potential to affect a given area.
Earthquake Insurance Coverage
Seismic activity is all too frequent in the Hawaiian Islands. When it comes to protecting business property, companies must purchase separate earthquake insurance policies because standard commercial insurance will not cover earthquake damage. Additionally, earthquake caused tsunamis can also cause damage; however, tsunami flooding may be considered to be a separate risk by some insurance companies. Hawaii business owners will want to purchase both earthquake and flood insurance to maintain full protection for their businesses.
Additional Information on Hawaii Insurance
The Department of Commerce & Consumer Affairs regulates the insurance industry in Hawaii. Learn more about commercial insurance in the state by calling (808) 586-2790 or visiting their website at http://hawaii.gov/dcca/ins.