Running a business in Hawaii comes with beautiful views—and serious risks. From hurricanes and volcanic activity to water damage and theft, business owners across the islands need solid protection. That’s where Hawaii commercial property insurance comes in.
This guide explains who needs coverage, what it includes, cost factors to consider, and what to do if you ever need to file a claim.
Who Needs Commercial Property Insurance in Hawaii?
Hawaii law doesn’t universally mandate every business to buy commercial property insurance, but many contracts, lenders, and landlords do. The Hawaii Insurance Division, part of the Department of Commerce and Consumer Affairs (DCCA), oversees insurance policies statewide, ensuring compliance with state insurance laws.
You’ll likely need coverage if you:
Borrow money for your property: Most lenders require commercial building insurance as a loan condition to protect their collateral.
Rent your space: Landlords often require proof of coverage in your lease agreement to protect their property and your contents.
Work in construction: Builder’s risk policies are often required on job sites to cover property under construction, materials, and equipment.
Run a clinic or farm: Businesses in these sectors have valuable equipment and structures that need protection from storms, fire, or theft.
Even if commercial property insurance isn’t universally required by state statute, going without business property coverage can be risky and lead to:
- Breach of contract penalties with lenders or landlords
- Significant out-of-pocket expenses for property damage
- The potential for full loss of your business assets and operational continuity
To fully protect your business, make sure you’re familiar with the 5 essential types of insurance most small businesses need
What Does Hawaii Commercial Property Insurance Cover?
A good commercial property policy doesn’t just protect your building—it shields your business from financial loss and helps ensure continuity. Most plans include:
Building Coverage: Pays for direct physical damage to your owned storefront, office, or structure after covered perils like storms, fire, or vandalism.
Contents Coverage (Business Personal Property): Covers your business’s movable assets, including tools, electronics, furniture, inventory, and supplies.
Business Interruption Insurance (also known as Business Income): Replaces lost income and helps cover continuing operating expenses if you must shut down or significantly scale back operations for repairs after covered property damage.
Inland Marine Insurance: Protects mobile tools and equipment, materials, or other valuable property that is moved between job sites, in transit, or is otherwise excluded from standard property policies.
Hawaii also has special coverage considerations:
Hurricane Coverage: Standard commercial property policies generally include windstorm coverage; however, for hurricane-related wind damage, a separate, higher deductible typically applies during hurricane season (June to November).
Volcanic Eruption Coverage: Most commercial property insurance policies in Hawaii do provide coverage for direct damage from a volcanic eruption, including lava flow, ash, dust, airborne shockwaves, and volcanic blast. However, damage from earth movement caused by a volcanic eruption is typically excluded.
Earthquake Insurance: This is not included in standard commercial property policies and must be purchased as a separate endorsement. Businesses in seismically active areas should strongly consider this.
Tsunami Coverage: Direct damage from a tsunami is generally excluded from standard property policies and requires specific, separate coverage.
Common Risks and Claims in Hawaii
Businesses in Hawaii face more unique natural hazards than many other states. Claims often come from:
Tropical storms or hurricanes: Strong winds can damage roofs, shatter windows, and cause widespread wind and rain damage.
Volcanic activity: Businesses near active volcanic areas may face ash damage to electronics and HVAC systems. Lava flows are a direct risk in certain designated zones.
Water damage: Heavy coastal rains, pipe leaks, and salt corrosion can quickly lead to costly interior damage.
Theft and vandalism: These risks are present across the islands, particularly in urban areas like Honolulu or tourist-heavy zones.
Cost Factors for Hawaii Commercial Property Insurance
Hawaii commercial property insurance tends to cost more than in many mainland states. This is primarily due to the higher natural disaster risks, higher construction costs, and the logistics of shipping replacement materials to the islands.
Factors That Influence Price:
Location: Risk goes up significantly in designated flood zones, coastal areas, or storm-prone regions. Properties in lava flow zones may also face unique rating considerations.
Building age and materials: Older structures or those not built to modern Hawaii hurricane-resistant building codes often cost more to insure. Concrete or steel construction can lead to lower rates than wood frame.
Coverage limits and deductibles: Higher coverage limits result in higher premiums. Choosing a higher deductible can lower your premium but means more out-of-pocket expense in a claim.
Claim history: A history of multiple past claims will almost certainly increase rates.
Mitigation efforts: Implementing hurricane shutters, fire suppression systems, or robust security measures can help lower premiums.
Industry Type: Low-risk professional offices typically pay less than businesses with higher inherent risks, such as restaurants or warehouses.
Claims Process and Your Legal Rights
If disaster strikes, the commercial insurance claims process in Hawaii follows established procedures overseen by the Hawaii Insurance Division.
Here’s what to do:
Report the damage quickly: Contact your insurer as soon as possible after discovering the loss.
Take photos and videos: Capture the scene thoroughly before cleanup or repairs begin.
Prevent further damage: Take reasonable steps to mitigate additional loss, such as boarding up broken windows or placing tarps, but keep detailed records and receipts for these expenses.
Submit documents: Provide all requested information, including detailed proof-of-loss statements, receipts, photos, and repair quotes.
Stay in touch: Utilize your insurer’s communication methods to track the claim’s progress.
If a dispute happens:
You can file a complaint with the Hawaii Insurance Division at cca.hawaii.gov/ins/consumer/file-a-complaint/. They can investigate and may facilitate mediation.
Final Word: Don't Leave Your Business Exposed
In Hawaii, one storm, flood, volcanic event, or fire can severely impact or even permanently shut down your business. Getting the right Hawaii commercial property insurance is a fundamental step for staying open, protected, and financially resilient.
Act now to protect your business:
- Check your lease or loan documents for any required coverage types and minimum limits
- Assess specific risks based on your industry, location, and building characteristics
- Ask about bundling coverage through a Business Owner’s Policy (BOP) to potentially save money
- Add extra coverage for specific perils like flood, earthquake, equipment breakdown, or extended business interruption, as needed
- Choose a licensed insurance agent who deeply understands Hawaii property insurance regulations and your specific business needs
Call (855) 718-7552 to estimate your costs and coverage needs.
