Most states require businesses with employees to purchase workers’ compensation insurance. Sometimes other policies are required, as well.
State laws can mandate insurance requirements
Most types of commercial insurance are optional. However, depending on the state laws where your business operates, you might be required to purchase:
Workers' compensation insurance
Almost every state requires businesses with employees to purchase workers’ compensation insurance. However, some states make exceptions for businesses with few employees.
For example, it's required in Georgia only when a business regularly employs three or more people. In most other states, every business with employees is required to carry workers’ comp, even for part-time employees.
Find workers’ compensation laws in your state.
Commercial auto insurance
You’re likely familiar with the law and insurance requirements for your personal vehicle. Similarly, every business-owned vehicle must be covered by commercial auto insurance.
This policy provides protection if an employee gets into an auto accident. It can cover injuries, property damage, and legal fees. Hired and non-owned auto insurance (HNOA) can provide additional coverages if you or your employees use personal vehicles for business purposes.
Professional liability insurance
Certain professionals, such as real estate agents, may be required by state law to purchase professional liability insurance. This policy provides protection if a client or customer sues over business mistakes or oversights that caused financial loss. It's also called errors and omissions insurance or E&O.
Liquor liability insurance
To obtain a liquor license, businesses such as bars and restaurants are often required to purchase liquor liability insurance. This policy provides protection if your business is held responsible for injuries or property damage caused by an overserved patron.