Massachusetts, one of the oldest states in America and a key part of American history, is home to an economy driven largely by small businesses. Massachusetts business insurance keeps over 700,000 small businesses running in The Bay State when they encounter a loss like a storm or fire or face a lawsuit from another party.
Massachusetts Business Insurance Requirements
Property and casualty insurance has no direct federal laws regulating the industry. The regulation of small business insurance falls on state governments, so every state has its own department that oversees insurance. For Massachusetts small business insurance requirements, only workers’ compensation and commercial auto insurance are required coverages.
Workers’ Compensation
For small businesses, workers’ compensation is a required coverage for any business with one employee. This requirement applies regardless of whether the employee is part-time or full-time. The only exception is for domestic servants who must work 16 hours per week to qualify for workers’ compensation.
In MA, the Department of Industrial Accidents oversees workers’ comp. It requires employers to display a “Notice to Employers” sign at the workplace with information on the workers’ comp carrier, how to report a claim, and contact information for the company.
Workers’ comp benefits employees in such a way that if they become injured or ill because of their work, the company will help pay the medical bills, provide return-to-work training, and, if necessary, physical therapy. It also will pay a portion of their wages.
It is advantageous for the employer to carry workers’ comp. Not only will it remain compliant by doing so, but it will also provide liability coverage in the event of a lawsuit by the injured employee.
Workers’ comp is available in Massachusetts through private insurance companies.
Commercial Auto
Along with workers’ comp, commercial auto insurance is required for small businesses that own a vehicle. The required minimum limits are as follows:
- $20,000 bodily injury liability per person
- $40,000 bodily injury liability per accident
- $8,000 personal injury protection (PIP)
- $5,000 property damage liability per accident
- $20,000 uninsured motorist coverage per person
- $40,000 uninsured motorist coverage per accident
As I keep pointing out in our state guides, these limits are very low, and any business needs to consider its assets vs insurance. If a serious accident happens and your business is at fault, the other party can forgo insurance and go after the assets if the limits are insufficient for the loss. $5,000 for property damage is very low. This includes repair to the vehicle or property, roadside clean-up, rental car, and, if the vehicle is a total loss, the cost of totaling the vehicle out.
Commercial Vehicle Insurance
If you drive a commercial vehicle (any vehicle over 10,000 pounds gross weight), Massachusetts does not have separate coverage limits from what are federal regulations. This means that any type of commercial truck must ensure they’re compliant with FMCSA requirements Federal Motor Carrier Safety Administration .
Massachusetts Commercial Liability Insurance
While there are some required coverages in MA, there is no requirement for general liability insurance. Usually, I can uncover several industries where the license board requires insurance to be licensed. This time, however, that was not the case, and it does not appear that there is much of a requirement around general liability.
However, this list is not exhaustive. Make sure to check with the license board to see if your industry has one, and remember that other clients and local municipalities will also require proof of insurance before hiring you. This is done through a document called a certificate of insurance (COI).
- General contractors: Contractors must carry a general liability policy with a minimum of $1,000,000, workers’ compensation, and a contractor’s bond of $5,000.
While not widely required, Massachusetts commercial liability insurance is very important for small businesses. As the name implies, it has broad coverage. This coverage is broken down into three areas of protection for your small business.
- Bodily injury
- Property damage
- Personal and advertising injury
Typically, most insurance providers in Massachusetts will include additional coverages like medical payments, premise liability, and product liability insurance in their general liability policy.
Other Types of Small Business Insurance for Massachusetts
While the following are not required by law, they still bring value, and many business owners should consider purchasing these to protect their business. Here are the most common types of business insurance policies to consider:
Type of Coverage | What It Is |
|---|---|
Professional Liability | Covers claims of financial harm or loss as a result of advice or failure to perform a contracted service made by a third party |
Commercial Property | First-party coverage for property owned, typically fixed property or contents |
Business Owner’s Policy (BOP) | A combination of general liability, commercial property, and usually business lost income |
Inland Marine | First-party coverage for tools and equipment |
Commercial Umbrella | Excess liability coverage that provides additional limits |
Cyber Liability | First- and third-party coverage for losses related to data breaches, hacking, or other cyber-related losses |
Employment Practices Liability Insurance (EPLI) | Protects small business owners from claims of wrongful termination or other harmful employment practices |
There is general liability and then there is professional liability. While general liability handles more tangible losses, like a customer slipping and falling in a business, professional liability insurance helps with more intangible business elements like giving bad advice or adhering to a contract. Thus, another name for it is errors and omissions insurance. Another important difference between general liability and professional liability is that professional liability normally carries a deductible.
Industries in the service sector or that provide advice as a service should consider professional liability, making this important for Massachusetts. The industry with the largest number of small businesses in the state is the service, professional, and IT sector. If you’re in the service sector, then be sure to check out our guide to the best professional liability insurance companies to compare your options, along with their costs, features, and financial ratings.
There are lots of different types of MA small business insurance policies. Commercial property insurance is both a type of insurance and a category of coverages. It is a first-party coverage for a business owner who:
- Owns a building
- Rents office space with furniture
- Has a warehouse full of inventory
One word of warning with property insurance: coverage is tied to the listed location on the policy. It also carries an insurance deductible.
Sometimes, general liability or commercial property is not enough. A great option for a small business is a business owner’s policy or BOP. A BOP combines general liability and commercial property, and insurance carriers usually include a third coverage for lost business income.
This is a great option because it is convenient: one policy provides multiple types of coverage. Usually, insurers will offer a BOP as a more affordable option than all three policies separately. However, a BOP isn’t for every small business. This policy is typically designed for businesses that have $5 million in revenue or less and fewer than 100 employees.
If your business owns tools or equipment that you take to job sites, then inland marine insurance is the coverage for you—a type of commercial property insurance. One major difference between inland marine and commercial property insurance is that inland marine coverage “travels” with the tools and equipment, while commercial property insurance only covers fixed property at a cited location.
Some providers will provide blanket coverage for tools and equipment, and others will have you list, or “schedule,” each item on the policy with their value.
A less common type of policy, but one you should still look into and know about, is a commercial umbrella policy—a type of excess liability policy. It is a great option for businesses that work in riskier fields. It comes into play when the liability policy becomes exhausted. It also can help when bidding on a project by showing that your business has additional limits of liability.
In an age where every business, no matter how small, has a digital component, cyber liability insurance has never been more important. Data breaches, hacking, cybercrimes, and ransomware are the well-known risks businesses face. But don’t let the name fool you, as cyber liability is divided into first- and third-party coverage.
- First-party cyber liability coverage: Helps with the expenses you face from a data breach, including investigations and notifying anyone impacted.
- Third-party cyber liability coverage: Helps protect your business if customers decide to sue you over negligence. In the event of a data breach, your business may be subject to fines and penalties from the government or private entities. This part of the policy can also help with those fines.
While this type of insurance may not be as well known, it is still an important one for small businesses to check out. EPLI stands for employment practices liability insurance. Now, this one would only be important for small businesses with employees because it handles claims of wrongful termination, hiring, and employment practices and provides coverage for sexual harassment and gender discrimination.
Massachusetts State Business Insurance Costs
In my research for this guide, I obtained various sample quotes from different brokers and carriers. All of the quotes were for companies with three or fewer employees and annual revenue under $250,000. I then took an average of the low and high monthly premiums.
Industry | Estimated Monthly Premium | Coverage Type | Coverage Amount |
|---|---|---|---|
Restaurant | $50-$230 | BOP | $1 million per occurrence, $2 million aggregate, and $30,000 in equipment and building coverage |
Photography Service | $21-$30 | BOP | $1 million per occurrence, $2 million aggregate, and $5,000 in equipment coverage |
Handyperson | $58-$190 | General liability | $1 million per occurrence, $2 million aggregate |
DJ | $15-$24 | General liability | $1 million per occurrence, $2 million aggregate |
Some of the variables that providers take into account when calculating your premium include the following:
- The geographic region within Massachusetts, including the specific county (for example, insurance will be higher in Boston versus in a business in Springfield)
- Yearly revenue and payroll
- Claims history
- Risk management and training
- Business experience
- Prior insurance history
How to Get Massachusetts State Business Insurance
There are three ways to purchase small business insurance in Massachusetts. You can do so from a provider, agent, or broker.
Massachusetts Small Business Statistics: Why Insurance Is Important
While Massachusetts is famous for Boston and the Patriots and for playing a role in the American Revolution, Boston is one of the major ports on the East Coast. Despite being a global city, the economy is still driven largely by small businesses.
Let’s take a look at these data from the 2023 Small Business Profile:
- Massachusetts is home to 722,819 small businesses. These small businesses are 99.5% of all employers in the state.
- Small businesses employ 1.4 million employees, which is 43.9% of the workforce.
Jobs and businesses continue to be added to the MA economy—and again, the primary drivers are small businesses. Between March 2022 and 2023, there was a net gain of 841 businesses, with a total of 25,978 new small businesses opening. Employment grew, too, with a net increase of 55,735 jobs in the small business sector.
As is the case in nearly every state, most of these small businesses have no employees. In Massachusetts, 588,006 of the total small businesses have no employees.
Yet, despite this, MA small businesses make an outsized contribution to the goods exported. 87.9% of all exporters in MA, or 8,595 businesses, were classified as “small.” Small businesses exported $8.8 billion in goods in 2022.
The largest industries without employees (124,577 businesses) are classified as professional, scientific, and technical businesses. Construction comes in second with businesses (76,901). Transportation is in third but just barely: 75,020 businesses.
There are lots of different types of small business insurance because different industries need different coverages. For example, the first industry on this list will need professional liability insurance, while the second one needs general liability. The most important coverage for the third business is commercial auto insurance. And of course, all of them, if they have only one employee, will need workers’ comp.
Frequently Asked Questions (FAQs)
Yes. In Massachusetts, any employer with one employee must provide workers’ comp insurance. The only exception is for domestic servants who must work 16 hours per week to qualify for workers’ comp. The Department of Industrial Accidents oversees workers’ comp and can find a company that is not compliant with this rule.
No, general liability is not required by the state of Massachusetts. While it is not required, it is a wise choice to purchase this coverage if you have regular interactions with customers or a business where customers are on your premises. Also, licensing boards may require you to carry insurance, and if your business works with a public entity, you will likely have to carry general liability.
Yes, commercial auto insurance is required in Massachusetts. The minimum limits are $20,000 per person, $40,000 per accident in bodily injury, and $5,000 in property damage.
While the cost will vary based on the size of your business, industry, and claims history, a DJ in MA may pay between $15 and $54 a month for general liability insurance and a restaurant can expect to pay several thousand a year for a BOP.
According to the Small Business Administration, there are around 655,151 small businesses. This figure represents 99.5% of all businesses in the state of Massachusetts.
To file a complaint, you must visit the Massachusetts Division of Insurance Consumer Service Unit. You can only file an insurance complaint online, through the mail, or by faxing the forms to 617-753-6830.
Massachusetts is currently the 16th most populous state in America. Per the most recent US Census Bureau, it has a population of the 14th most populous state in America. According to the US Census Bureau, Massachusetts’ population is 7,001,399.
Bottom Line
Though smaller in size, Massachusetts has significant diversity between the large metropolitan area of Boston, the beautiful coastline of Cape Cod, and the rolling hills of the Berkshires. Yet, throughout the different regions of the state, you’ll find hundreds of thousands of small business owners working hard to build a better life for themselves and improve their community.
These small business owners rely on not only the support of their neighborhoods but also small business insurance for help when a loss occurs. Whether it is a convenience store theft, a restaurant fire, or a customer slipping on a wet floor in Boston, small business insurance is there to help MA small businesses.
Simply Business understands the importance of insurance and makes it simple and affordable to purchase online. In 10 minutes or less, you can compare quotes in real time from top providers, modify coverages, purchase a policy online, or call to speak to one of its agents.
