Fireworks Insurance

Some of the top factors that affect the cost of fireworks business insurance include:

• Type of display: It'll cost more to insure a fireworks display with mortars and multi-shot aerial fireworks than a low-budget show with firecrackers, spinners, and fountains.
• Annual revenue: Businesses that earn more revenue are associated with costlier claims, which means they pay more for insurance.
• Number of employees. A larger workforce brings a higher risk of employee accidents and mistakes, which raises the cost of workers' compensation, general liability, and similar policies.
• Property value and condition: The age, condition, and value of your office and the value of your fireworks will determine how much it costs to insure them.
• Business location: Localized factors such as crime rates, healthcare costs, foot traffic, risk of natural disasters, and property values can impact your insurance premiums.
• Safety guidelines: Insurers may offer lower rates to pyrotechnic companies that comply with strict equipment certification and safety protocols, such as those set forth by the National Fire Protection Association (NFPA).
• Risk management: Businesses that implement video surveillance, sprinkler systems, and other security measures, including cybersecurity controls, usually have lower premiums.
• Policy limits and deductibles: Insurance policies with higher limits and lower deductibles provide better protection, but come with a higher premium.
• Claims history: A fireworks business that has filed an insurance claim in the past will cost more to insure than one with a clean claims history.

Fireworks are heavily regulated on the federal, state, and local level. Licensing requirements vary depending on your area and the type of fireworks business you run, such as display company, retailer, wholesaler, or manufacturer.

Here's what you likely need to run your business:

• Business license. Every business owner typically needs a business license to operate legally.
• Federal Explosives License (FEL) or Federal Explosives Permit (FEP). Government regulations mandate a license or permit from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
• Pyrotechnic Operator License. Your business must obtain a license from the State Fire Marshal, though the exact requirements depend on your state laws.
• Sales tax permit. A sales tax permit allows your business to sell tickets, merchandise, and other tangible goods.
• Fireworks permit. Each county or city will require you to obtain a fireworks permit in order to put on a show.

Keep in mind, some areas have stricter regulations than others. You'll need to make sure your business is in compliance with local zoning ordinances, fire and safety codes, Americans with Disabilities Act (ADA) standards, and more.

Standard business insurance policies exclude high-risk explosives, which is why your business needs specialized pyrotechnics insurance.

Pyrotechnics insurance provides essential protection for your business, and it's usually required by law. Your business takes on tremendous liability with each show—which means you could end up responsible for medical bills, legal costs, and other damages from an accident. 

Here are the policies you likely need:

• General liability insurance, also called public liability insurance, covers accidental bodily injuries and property damage at a fireworks show, such as a Roman candle that hits a bystander. You might need proof of liability insurance to obtain a fireworks license or permit, sign a commercial lease, or get a business loan.
• Product liability insurance covers harm caused by consumer fireworks sold by your business, such as a defective sparkler that ignites unexpectedly and causes a fire. State and local municipalities usually require fireworks businesses to carry a general liability policy that includes this coverage.
• Inland marine insurance pays for damage or loss of fireworks in transit, storage, or staged at a venue. It's especially important since standard property insurance won't cover explosives.
• Workers' compensation insurance is required in New York, California, and most other states as soon as you hire your first employee. It pays for medical treatment if a worker is injured on the job and provides them with disability benefits while they're recovering.
• Commercial auto insurance covers accidents involving business vehicles. Almost every state requires this coverage for vehicles owned by a business.

Insurance protects your business against costly lawsuits and accidents, and helps you comply with local laws and regulations. Vendors, sponsors, and municipalities may ask to be listed on your policies as an additional insured.

Remember, unlicensed and illegal fireworks will not be covered by your policies.

Due to the high risks involved with fireworks, every show needs insurance. Most states and municipalities will require you to have liability insurance.

Many insurance providers offer one-day event insurance or short-term liability insurance that covers third-party accidents at events hosted by your business. For instance, you could buy event insurance for a town's Fourth of July show, or seasonal insurance for a series of fireworks shows at a summer carnival.

Keep in mind, it's always preferable to carry year-round coverage. Businesses that cancel their policies may see increased premiums or have difficulty restarting coverage, as it's a red flag for insurers.

Fireworks companies and pyrotechnicians often invest in the following insurance products to protect against unexpected out-of-pocket costs:

• Commercial property insurance covers burglaries, fires, storms, and similar incidents that cause property damage or losses, though a standard policy won't cover fireworks.
• Equipment breakdown insurance protects against financial losses caused by the sudden failure of an electronic firing system or other fireworks equipment.
• Liquor liability insurance helps pay for legal fees and damages caused by someone who purchased alcohol at your fireworks show. Or, you might need host liquor liability insurance for an event where alcohol was provided for free or permitted.
• Hired and non-owned auto (HNOA) insurance covers auto accidents involving personal, rented, and leased vehicles used for business purposes.
• Commercial umbrella insurance, similar to excess liability insurance, provides additional coverage when the limit is reached on another liability policy, such as general liability insurance.

Fireworks companies can save money on insurance through a variety of methods, including:

• Compare quotes. Insurance providers offer different rates and coverages, so it's important to shop around. Insureon makes this process easy with our online application that retrieves quotes from top-rated carriers.
• Bundle policies. You can often save money when you purchase two or more types of coverage in one package, such as a business owner's policy or a specialized pyrotechnics bundle.
• Customize your coverage. Choose lower limits or higher deductibles to reduce your premium, but make sure your coverage is sufficient to cover a claim and that you can afford to pay the deductible in a crisis.
• Avoid accidents and insurance claims. Policyholders can prevent employee injuries and customer accidents that lead to claims with strict employee training and adherence to safety protocols. A clean claims history keeps your premium low.

Our insurance agents can help you find the right insurance solutions for your business, whether your company puts on fireworks shows, runs a fireworks stand, or manufactures fireworks.