If you own a small business in the Hawaii , this information will help you understand Hawaii Commercial Liability insurance and protect your business and your personal assets from legal claims and settlements that can spell financial ruin. Whether you work in Honolulu, Kapolei, Pearl City, or Kaneohe on Oahu, Lihue in Kauai, Hilo or Kona on the Big Island, Lahaina on Maui or anywhere else in the Aloha State having sufficient commercial liability coverage is an important part of any small business plan in Hawaii.
Fast Facts About Hawaii Small Business
A small business is defined as any company with fewer than 500 employees. Small business is vital to Hawaii’s economic well-being, accounting for more than nearly 98% of all state employers. Of Hawaii’s 119,182 small businesses in 2008 (the latest data available), 25,478 were small employers, accounting for nearly 56% of the state’s private-sector jobs. Another 93,704 were one-person operations with no employees.
Source: SBA Hawaii Small Business Profile 2011.
About Commercial Liability Insurance for HI Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Hawaii business from financial loss resulting from claims of injury or damage cause to others by you or your employees. A policy typically covers:
Bodily Injury – physical damage to a person other than an employee at your place of business and injuries caused by you or an employee at a client’s home or work place.
Personal Injury – libel, slander, copyright infringement, invasion of property or privacy, wrongful eviction, false arrest and similar acts that cause damage to a person’s reputation or rights.
Property Damage – damage done to another person’s property by you or an employee in the course of conducting your business.
Advertising Injury – losses caused by your advertising
Legal Defense and Judgments – costs to defend against real and frivolous suits and judgments up to the limit of your coverage. Note this generally does not include punitive damages for negligence or willful misconduct.
Hawaii Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Hawaii. Hawaii is a modified comparative negligence no-fault state. A plaintiff must not be more than 50% at fault to collect damages. There are no caps on personal injury awards in Hawaii. The statute of limitations for general personal injury is 2 years for negligent conduct, and 2 years for products liability, libel/slander and wrongful death. Accidents and lawsuits (legitimate and frivolous) do happen in Hawaii. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your Hawaii business to limit your risk exposure.
How Much Hawaii Commercial Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Hawaii business you operate or products you manufacture should determine how much Hawaii commercial general liability insurance you need. A good rule of thumb for most small businesses is between $500,000 and $1 million. However, if yours is a high-risk business such as the building trades or has a high volume of interaction with the public such as a restaurant or retail business, you should consider increasing your coverage. Note that if you operate out of your home, your homeowner’s or renter’s insurance has limited coverage for business liability and loss.
How Are Premium Costs Assessed
Hawaii commercial liability insurance premiums are based on a number of factors including the types of service or products you provide, the number of people you employ, how long you’ve been in business, and your claims history. Coverage is typically capped at a specific dollar amount for your policy period.
Other Insurance to Consider for Your Hawaii Small Business
Hawaii requires that anyone who employs one or more persons, whether full or part time, carry workers compensation insurance. Sole proprietors with no employees are not required to carry workers compensation. Other exemptions apply. For details contact the Hawaii Department of Labor and Industrial Relations. labor.hawaii.gov
Employee Disability Insurance is mandatory in Hawaii. Under Hawaii Temporary Disability Insurance (TDI) law, employers must provide partial wage replacement insurance coverage for eligible employees for non-work-related sickness or injury.
Hawaii requires that all drivers carry minimum automobile insurance. If you use your car or truck for business, it is recommended that you purchase a commercial vehicle policy.
Employee Disability Insurance
BOP – Business Owner’s Package
E&O – Errors & Omissions
EPLI – Employment Practices Liability Insurance
Commercial Property Insurance
Regulating Agency and References
Hawaii Department Commerce and Consumer Affairs/Insurance
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage. Visit their website at hawaii.gov. Write Insurance Division, P.O. Box 3614, Honolulu, HI 96811. On Oahu, call 808-586-2790.
Hawaii Small Business Administration
The SBA is an independent agency of the federal government created to aid, counsel, assist and protect the interests of small business concerns and maintains a District Office in Honolulu. Get the link to the Hawaii SBA at www.sba.gov.
National Association of Insurance Commissioners (NAIC)
This is an organization of insurance regulators from the 50 states, District of Columbia and the five U.S. territories. NAIC provides a forum for the development of uniform policies when appropriate. It also offers an online form for filing complaints, reporting suspected insurance fraud and downloading key financial information about insurance carriers at naic.org.
Insurance Information Institute (III)
This organization’s mission is to improve public understanding of insurance – what it is and how it works. Visit III at www.iii.org.