As a business owner, you know how much hard work, time, and dedication goes into starting and running a company. Whether it’s a small coffee shop or a large accounting firm, it takes a certain type of grit to deal with the challenges of owning a business. But no matter how successful your company is or how hard you work, every business comes with serious risks that can threaten its viability and your livelihood. Luckily, with the right commercial insurance, you would be covered financially against some of these incidents. And while it’s nice to have that peace of mind, is business insurance required here in Massachusetts? Let’s unpack that question.
What is Business Insurance?
Business insurance, or commercial insurance, is just as the name implies: insurance to protect your business. Just as your car and home are, your company is a significant investment and should be treated as such. Commercial insurance policies—of which there are many different types—can protect businesses against all kinds of incidents and risks they may face during operation. This coverage helps prevent business owners from having to pay large sums of money out-of-pocket for damages and claims against their company.
Business Insurance Required in Massachusetts
Regardless of your company’s size, Massachusetts legally requires two types of business insurance be purchased:
- Workers’ compensation
- Commercial auto insurance (Unless there are no owned or hired vehicles in the business)
Let’s break down each of these policies.
Workers’ Compensation Insurance
ALL Massachusetts businesses, no matter the size or how many employees they have, are legally required to carry workers’ compensation. Workers’ comp pays for medical expenses/lost wages if illness or injury occurs and eliminates the potential of an employee filing a lawsuit for damages against the organization.
Commercial Auto Insurance
Commercial auto insurance is legally required for businesses that own and operate commercial vehicles in order to protect employee drivers, passengers, other drivers, AND your company in the event of an incident. It’s important to evaluate various levels of coverage to ensure you have enough protection for your fleet of vehicles and your team of drivers. Many times, it makes sense to obtain higher limits and additional coverage beyond the minimum that Massachusetts requires.
Additional Recommended Insurance Policies
Although there are only two types of business insurance required in Massachusetts, it’s worth looking into other types that help protect your business.
- Business Owner’s Policy (BOP) bundles coverage for general liability, commercial property, business income, equipment.
- General Liability Insurance protects against third-party claims of events such as bodily injury, property damage, reputation harm.
- Commercial Property Insurance protects one’s place of business and everything within the location in the event of incidents such as a fire, burglary, and certain types of weather-related damage.
- Professional Liability Insurance protects against negligence, mistakes, copyright infringement, plagiarism.
- Employment Practices Liability Insurance (EPLI) handles claims of wrongful practices within the company (ex: discrimination, wrongful termination, breach of contract)
How Much Coverage Does My Business Need?
The amount of coverage available through a specific policy is known as your policy limit. Commercial insurance policies often offer two types of limits: per occurrence and aggregate. Per occurrence offers the maximum amount of protection your business has in the event of an individual incident, while aggregate limits offer the maximum amount of coverage you have for an entire year—or whatever the duration of your policy is. Recommended coverage limits will depend on multiple factors that are specific to one’s company; the more things you have to protect, the more insurance coverage you’ll want to get. It’s important to revisit your policies frequently or reach out to your insurance agent with any questions or concerns.
As a business owner, you’re already busy enough, and understanding the ins and outs of business insurance can be confusing and overwhelming. Unsure of how to begin the process of finding the best price and coverage for your business? Contact TJ Woods Insurance Agency today and we’ll help find which policies work best for you.
