Having adequate business insurance is a good thing. You should view insurance as an investment in protecting your business and keeping it operational in the face of disaster. Yet, there's no doubt that you can have too much insurance, which could hurt your budget. No matter what end of the spectrum you fall on, you also have to consider the types of business insurance you need to have by law. This varies from one state to the next, but there are some key things to keep in mind.
When Does the Government Require Business Insurance?
Laws do not require you to protect your property's value. There is no rule that says you have to have insurance on business operations or for fire-related events. However, there are some laws that otherwise impact your business.
- Liability Insurance for Vehicles: Commercial auto insurance is a must have if your business requires the use of vehicles. Just like operating a personal car, companies with vehicles of any type need liability insurance. It helps to protect the other drivers on the road from incidents caused by your employees. The rules for how much coverage you need to have vary by state. And, keep in mind this isn't likely the only insurance you’ll want on your vehicle, but it is the only requirement.
- Workers Compensation Insurance: Most businesses with employees need to carry workers compensation insurance. It helps to protect your employees if they’re hurt on the job. You may need to purchase coverage from a commercial carrier, through your state's workers compensation insurance program or be self-insured.
- Unemployment Insurance Tax: In some situations, you may be required to pay unemployment insurance tax. A good rule of thumb is that if you are required to pay these taxes, you'll need to have insurance.
- Disability Insurance: Some states require that employers carry disability insurance for eligible employees for types of non-work related injury or sickness. This includes California, Hawaii, New Jersey, New York, Rhode Island and Puerto Rico.
Take the time to discuss the business insurance requirements in your state with your independent insurance agent. Ensure these are met whenever purchasing a new policy. They are meant to protect your business, your employees and others who you interact with, and can offer financial protection from various risks.
We’ll help protect your professional interests. InsureMyBiz.com was developed for you to find an insurance broker expert. We have over 150 different types of polices that are very detailed and specific in coverages and limits. Visit our homepage to see the different types of business and the agents who can insure them.