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Which business insurance policies are required by state laws?
State laws can affect which types of business insurance you might need. These policies are required in most states in the nation.
Workers' compensation insurance
Almost every state requires workers' compensation coverage as soon as a business hires its first employee. This policy covers the cost of work-related bodily injuries and illnesses, and also provides disability benefits while the employee is unable to work.
For example, all New York businesses must provide workers' compensation to their employees, but in Florida it's only required when a business has four or more employees.
Most policies include employer's liability coverage, which protects small business owners against lawsuits related to work injuries.
Commercial auto insurance
In most states, you're required by law to carry commercial auto insurance for vehicles that are owned by a business. Your policy will also have to provide sufficient coverage to meet your state's requirements for auto liability insurance.
A commercial auto policy covers costs when your business vehicle is involved in an accident. It can help pay for property damage, medical expenses, and legal costs in the event of a lawsuit.
Keep in mind that your personal auto policy won’t cover work-related driving. That’s why you may need commercial auto insurance for a business-owned vehicle, or hired and non-owned auto insurance (HNOA) for personal, leased, or rented vehicles used for work.
How much does small business insurance cost?
Commercial insurance can be affordable for small business owners. Average costs for Insureon's customers are:
General liability: $42 per month
Workers' comp: $45 per month
Professional liability/E&O: $61 per month
Factors that influence business insurance costs include:
- Your industry and risks
- Business operations
- Number of employees
- Policy limits and deductibles
Top professions we insure
Other common questions about commercial insurance
How does my location affect my business insurance needs?
In addition to state laws, there are a few other ways in which your location can affect the amount and type of coverage you need:
- Property value. Property insurance costs more in locations with higher property values. If your real estate is valued at a higher amount, you may need higher limits on your commercial property insurance or business owner's policy (BOP) to cover any potential property damage.
- Crime. In high-crime areas you should invest in coverage against theft and vandalism, such as comprehensive auto insurance, to protect your vehicle.
- Population. Less foot traffic can result in potential savings on commercial general liability insurance, a key policy to protect against customer lawsuits. In contrast, a small business owner with a storefront in a major city can expect to pay more for insurance.
- Weather. Most business property policies have exclusions for earthquakes and flooding. If your business is vulnerable to these risks, contact an insurance agent who can help you find an endorsement for your policy.
How do I get a certificate of insurance for my business?
Insureon's licensed agents can help you find policies that fulfill your state's requirements and protect against financial losses. Once you've purchased insurance with us, you can download a certificate of insurance (COI) by logging into your account.
Can my company be held liable for a data security breach?
Yes – that's why cyber insurance is so crucial. Small businesses are a common target of cyberattacks since they often have fewer security measures in place.
State data breach laws typically require businesses to report security breaches to affected residents, and the costs can escalate quickly. Cyber liability insurance lessens the financial impact by paying for notification costs, legal fees, and fines.
Does my industry affect state insurance requirements?
Yes, your state may have special requirements for business insurance and bonds for your industry. You may also need a license depending on the work you do.
Contractors often need to carry a general liability policy or a surety bond to perform certain types of work. Having the right insurance and bonds helps you comply with state licensing requirements.
Professionals who offer advice or services, such as real estate agents and lawyers, sometimes need professional liability insurance to get licensed in their state. This policy is also referred to as errors and omissions insurance (E&O) or malpractice insurance.
State laws may also mandate insurance or bonds for dispensaries and other cannabis businesses.
Note that cities and counties may have their own laws, in addition to state laws.
How can I save money on business insurance?
As with any purchase, shopping around is one of the best ways to find an affordable option. With Insureon, you can compare quotes from top-rated providers by filling out a free online application.
Other ways to save include bundling policies for a discount and choosing less expensive policy options, such as lower limits or a higher deductible. Learn more about how to find cheap business insurance.
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