From Honolulu cafés to Maui tour companies, small business insurance in Hawaii isn’t just about managing risk—it’s about following the law. Hawaii has strict business insurance laws that every owner must understand to stay compliant and protected.
This guide covers what coverage is required, what it includes, how costs are determined, and what to expect if you file a claim.
Who Needs This Coverage?
Hawaii’s commercial insurance requirements include several mandatory coverages for nearly all businesses:
- Workers’ Compensation: Required for any employer with one or more employees—whether full-time, part-time, seasonal, or a family member.
- Temporary Disability Insurance (TDI): Hawaii is one of only five states that require employers to provide wage replacement for non-work-related injuries or illnesses. All employers must provide TDI coverage to eligible employees.
- Commercial Auto Insurance: Required for any vehicle owned by a business. Policies must comply with Hawaii’s no-fault law and provide these minimum coverages:
- Liability: $20,000 per person / $40,000 per accident for bodily injury and $10,000 for property damage (20/40/10).
- Personal Injury Protection (PIP): $10,000 per person to cover medical expenses for you and your passengers, regardless of fault.
- Unemployment Insurance (UI): Your business is liable for UI tax if it pays any wages to one or more employees in the current or preceding calendar year.
Breaking these rules can result in significant fines, back taxes, and license suspension.
Key Benefits & Coverage Details
To fully protect your operation from lawsuits and property loss, you need more than the basics.
- General Liability: Covers bodily injury and property damage to third parties. It is essential for any storefront or service business.
- Business Owner’s Policy (BOP): Combines general liability and commercial property coverage, making it a perfect fit for small retailers or cafés.
- Professional Liability: Includes Errors & Omissions (E&O) to cover professional mistakes and Employment Practices Liability (EPLI) to handle claims of discrimination or wrongful termination.
- Cyber Insurance: With strict data breach notification rules, cyber liability protection is critical if you store customer data.
- Contractor Insurance: Inland marine coverage protects mobile tools and equipment—a must-have for construction firms working across the islands.
Common Claims & Real Scenarios
The most frequent claims in Hawaii highlight why comprehensive insurance is so important:
- Restaurant Insurance Needs: Foodborne illness outbreaks or liquor-related injuries can lead to significant lawsuits.
- Hotel and Tour Company Claims: Water sport accidents during guided tours can trigger major bodily injury claims.
- Contractor Risks: Equipment loss from hurricane flooding or scaffolding falls can result in claims exceeding $80,000.
- Professional Service Claims: A client suing over missed deadlines that caused financial losses would be covered by a professional liability policy.
Discover cost-saving strategies in our guide: Local Business Insurance Solutions to Save You Money.
Costs & State Specifics
Your premium depends on your industry, number of workers, location, and claims history.
Average yearly premiums across common industries:
- Retail (under 10 workers): $850–$1,600/year
- Hospitality/food service: $1,400–$2,800/year
- Construction and contractors: $2,000–$4,000/year
- Professional services: $700–$1,200/year
Claims Process & Legal Requirements
If something goes wrong, act fast. Hawaii’s regulators have strict timelines.
- Notify your insurer immediately after discovering damage or an injury.
- Document thoroughly with photos, video, receipts, and employee statements.
- Submit paperwork promptly. Under Hawaii law, insurers must typically acknowledge a claim within 15 working days and must approve or deny it within 30 calendar days after receiving your completed proof of loss.
- Cooperate with inspections and inquiries from adjusters.
Bottom Line & Expert Recommendations
If you’re running an enterprise anywhere from a Kona coffee farm to a Waikiki boutique, the right coverage is essential. It shields against lawsuits, storms, staffing disputes, and cyberattacks—and keeps you legally compliant.
What we recommend:
- Secure workers’ comp and TDI before hiring your first employee.
- Bundle general liability and property into a BOP where possible.
- Add cyber liability if you store any customer information.
- For high-risk industries like contracting or hospitality, review specialized add-ons regularly.
Take action now: Call our experts: 855-718-7552 for help with Hawaii commercial insurance requirements.
