Small Business Insurance Requirements

If you are opening your own small business, there are certain insurance requirements that you must be aware of to ensure that you choose the correct insurance coverages.  These coverages are designed to protect you and your business, as well as those who are employed by you, or use your services.  These requirements include commercial auto and workers’ compensation coverages.

Commercial Vehicle Requirements

Small business that own or lease vehicles specifically for business use are required to carry commercial auto coverages.  The policy you choose should include property damage and liability coverages.  Property damage coverages pay for any damages to property that occur due to an accident involving one of your vehicles.  Liability coverage pays for damages that are caused by an employee that is driving your vehicle.  The minimum coverages and additional options vary from one insurance company to the next, so you need to make sure that you understand the policy you are choosing.  You will also need these coverages if you are using your personal vehicle for work related activities.

Workers’ Compensation

Workers’ compensation is also one of the small business insurance requirements according to  These coverages provide wage replacement and medical benefits for any employ that is injured while performing their job duties.  Additionally, this type of coverage also helps to provide protection to the employer against civil lawsuits.


If you do not feel that you need one of the types of small business insurance requirements, you will need to file for exemption with the Department of Financial Services.  The applications for exemption have certain requirements and documentation in order to submit them, so make sure to read the fine print to see what you need.  You will not be able to decline either of these coverages until your application has been approved by the DFS, so make sure to plan your time accordingly to ensure that you have the correct insurance prior to the launch of your business.

Additional Requirements

When considering small business insurance, you will also need to verify the individual county and city requirements for small businesses.  These requirements may include additional insurance coverages beyond what is required by state laws, so make sure to check with local government offices to make sure you have the correct coverages.

If you choose to secure a bank loan in order to pay for any equipment or buildings for your business, the lending institution may require their own insurance coverages to protect their investments.  This can include specific amounts of property coverages, so you will need to verify these requirements when you sign for the loan.  These additional coverages are not required by  law, but refusal to purchase these coverages could result in revocation of your loan.

These small business insurance requirements are important considerations when setting up your business insurance at, so you will need to make sure to include these additional costs when determining the amount of your budget.