A Guide to BOP Insurance in Hawaii
Whether you run a café in Honolulu or a guesthouse in Hilo, understanding Hawaii BOP insurance is essential. While a Business Owner’s Policy (BOP) isn’t required by law, it packages key liability and property protections into one affordable plan, helping your business manage risks from storms, theft, and lawsuits.
This guide explains what a BOP is, how it fits with Hawaii’s mandatory insurance laws, and what it covers.
What is a BOP and Who Needs It?
A Business Owner’s Policy is an insurance package that combines General Liability and Commercial Property insurance, often at a lower cost than buying each policy separately.
While a BOP itself is not legally required, it is often a contractual requirement for:
- Signing a commercial lease.
- Securing a business loan.
- Winning contracts with clients or vendors.
A BOP is ideal for small, low-risk businesses like retail stores, professional offices, and cafés.
How a BOP Complements Hawaii's Mandatory Insurance
It is critical to understand that a BOP does not satisfy Hawaii’s legally required insurance for employers. Those policies must be purchased separately.
Legally Required Insurance (Sold Separately from a BOP):
- Workers’ Compensation Insurance: Mandatory for any employer with one or more employees.
- Sole proprietors and partners without employees are generally exempt from this requirement unless they voluntarily elect coverage.
- Temporary Disability Insurance (TDI): Mandatory for employers to provide benefits for non-work-related injuries or illnesses.
- Commercial Auto Insurance: Required for business-owned vehicles. Policies must include $20,000/$40,000/$10,000 in liability and a mandatory $10,000 in Personal Injury Protection (PIP), as mandated by Hawaii Revised Statutes Title 28, Chapter 431.
- Unemployment Insurance (UI): A mandatory tax for employers.
What Does a Hawaii BOP Cover?
A BOP typically bundles three core protections:
- General Liability Insurance: Covers legal costs and medical bills from third-party injuries or property damage. Example: A tourist slips on your wet floor in Waikiki and sues for $25,000.
- Commercial Property Insurance: Protects your building and contents from fire, wind damage from storms, theft, or vandalism. Important Note: Flood damage is excluded and requires a separate flood insurance policy.
- Business Interruption Insurance: Replaces lost revenue if your business temporarily closes after a covered disaster, like a fire or severe windstorm.
Common Claims & Risks in Hawaii
- Slip-and-Fall Injuries: Retail stores in Oahu and Maui often deal with injury claims from spills or uneven flooring, with costs averaging $10,000–$50,000.
- Hurricane & Storm Damage: While a BOP’s property coverage can help pay for rebuilding after wind damage, you need a separate policy for flood or storm surge losses.
- Theft & Vandalism: Tourist-heavy areas like Waikiki see spikes in seasonal theft; a BOP protects against equipment and inventory losses.
- Cyber Attacks: Though not part of a standard BOP, adding a cyber liability endorsement is crucial for any business handling customer data.
Hawaii BOP Insurance Costs
BOP premiums in Hawaii usually range from $500 to $2,000 annually, depending on your industry, location (coastal vs. inland), building safety features, and claims history. Businesses near hurricane zones typically face higher property insurance premiums.
Filing Claims in Hawaii
If a disaster strikes, take immediate steps:
- Report Damages Quickly: Notify your insurer as soon as possible.
- Gather Documentation: Take photos, collect receipts, and save incident reports.
- Cooperate with Your Insurer: Under Hawaii law, insurers must typically acknowledge your claim within 15 working days and approve or deny it within 30 calendar days after receiving your completed proof of loss.
Bottom Line
A well-built BOP protects your business from major financial hits while helping you meet critical contractual requirements. When paired with mandatory coverages like workers’ comp, TDI, and commercial auto, it creates a strong safety net for your Hawaii business.
learn more about affordable local insurance solutions for small businesses to keep costs down while staying protected. Want help choosing the right coverage? Call 855-718-7552
