Appropriately named the Garden State, New Jersey’s robust small business economy includes nearly 10,000 farms. Whether it is a farm or a transportation company, small businesses are a significant part of New Jersey’s growing economy—driving small business insurance in New Jersey as a key part of a successful business plan.
While not every coverage is required, NJ does have some strict requirements on commercial auto and commercial truck insurance, as well as workers’ comp. Because of its laws, small businesses should consider other coverages, like employment practices liability.
New Jersey Business Insurance Requirements
Any NJ small business insurance guide will need to touch on requirements for the state. As is the case for nearly every state, the primary requirements for small business insurance in New Jersey are workers’ compensation and commercial auto insurance. However, some important nuances of the law affect the types of coverage you both need and should seriously consider. Click on the tabs below to learn more about these requirements:
Workers’ Compensation
Workers’ compensation insurance is the only nationally required small business insurance and is required in New Jersey. This type of insurance benefits both the employee and the employer—covering critical medical bills, lost wages, and other legal costs. It helps employees if they become ill or injured on the job by paying them some form of wage replacement, taking care of medical expenses, and even providing return to work and temporary jobs.
In the unfortunate case where an employee dies as a direct result of their job, workers’ comp will make a death benefit payment to the family. According to the US Bureau of Labor Statistics, there were a total of 116 workplace-related fatalities in NJ—proving how crucial workers’ comp is to every employee, regardless of the industry and state.
The requirement for New Jersey is very simple: every company with one employee is required to provide workers’ compensation insurance. However, there are some additional details that you need to know:
- If the worker is a contract worker from another state but is working in New Jersey, the company is required to provide workers’ comp for them.
- Corporate officers are counted as one employee and must be furnished with workers’ comp.
- Sole proprietors must have workers’ comp insurance.
- LLC partners and LLC members are exempt from the requirement for this coverage.
There is one exception to purchasing workers’ comp in New Jersey. You can opt to be self-insured. However, you have to prove your business has the financial resources to handle worker comp claims and then be approved by the state for self-insurance.
You also have to have a plan for handling claims and decide on paying an insurance company to handle your claims or a third-party administrator.
There are currently more than 400 different carriers licensed to sell workers’ comp in New Jersey, so you have plenty of options when looking for insurance.
NJ takes workers’ comp seriously—it is the first state I’ve encountered to criminalize not providing workers’ comp. If, after an investigation, it is determined the lack of workers’ comp at your business was willful, it is a crime of the fourth degree. Penalties can also be incurred at $5,000 for the first ten days and then $5,000 for each ten-day period without coverage. If it is a corporation, corporate officers can be individually fined if the business is uninsured.
And in case you’re thinking they’ll never know, NJ does regular investigations. It conducts what it calls “cross-matching” with multiple different state agencies to see if a business shows up on one but not on another list of businesses offering workers’ comp. Not only is being uninsured in New Jersey financially risky, but you may also end up being charged with a crime.
Commercial Auto Insurance
The other type of small business insurance required in New Jersey is commercial auto insurance. NJ’s minimum commercial auto insurance requirements include the following:
- Bodily injury: $15,000 per person and $30,000 total per accident. Bodily injury covers injuries or even death in an accident when your business is at fault.
- Property damage: $5,000 per accident. Like bodily injury, this is a liability coverage that will handle the damages caused in an accident when you are at fault.
- Personal injury protection: $15,000 per accident. This is a no-fault medical coverage that will help passengers in your vehicle who are injured in an accident.
While these are minimum limits, they are extremely low. For example, $5,000 in property damage means if your vehicle is at fault in an accident, that $5,000 has to cover any on-site damage or clean-up costs. This amount should also be potentially consumed for the rental, repair, or replacement of the other vehicle, as needed. The reality is that $5,000 is not enough for everything that was just described.
New Jersey has higher minimum limits for larger commercial vehicles. For commercial motor vehicles (CMVs), in between a typical sedan or truck and a semitruck, the minimum liability limit is $300,000. This applies specifically to those vehicles that are garaged in New Jersey and weigh between 10,001 and less than 26,001 pounds.
While the federal government has regulations on minimum coverage for semitrucks, in 2024, the New Jersey governor signed into law its own requirements for semitrucks. CMVs must now carry at least $1.5 million in liability to operate in the state.
General Liability Insurance in New Jersey
General liability is the most common type of business liability insurance because of its broad range of coverage. It has three primary areas of coverage:
- Bodily injury
- Property damage
- Personal and advertising injury
However, most insurance companies in New Jersey will include other coverages like medical payments, premise liability, and product liability insurance in their general liability policy. Endorsements can expand general liability coverage, too.
While commercial auto insurance and workers’ comp are the only state-wide required coverages in New Jersey, there are some other industry-specific requirements, which include the following:
- HVAC heating, ventilation, and air conditioning contractors: They are required to carry general liability insurance and a surety bond. The state requires a surety bond of at least $3,000 with liability coverage of at least $500,000.
- General contractors: They must carry a surety bond of at least $3,000 with coverage of at least $500,000 in general liability.
- Daycare centers: They are required to maintain a general liability policy.
- Handyman: They should be registered as a home improvement contractor. To do so, you must have a certificate of general liability insurance.
The above examples illustrate this: many industries require insurance, and a number of local municipalities do, too. So make sure to check with your industry licensing boards and local municipal governments to see the New Jersey business insurance requirements you may need to meet.
Special Considerations for Small Business Insurance in NJ
While there are required coverages in NJ, like workers’ comp, because of the state’s laws and economy, there are a few other coverages that small business owners should consider.
Employment Practices Liability
This insurance, regularly abbreviated EPLI, offers businesses protection against allegations of discrimination, including in the hiring and firing elements of employment. New Jersey’s law against discrimination (LAD) is a civil law prohibiting discrimination in NJ. In many ways, it is broader than the current federal law.
For example, federal law protects people ages 40 years and older from age discrimination. In NJ, the age discrimination begins at age 18. Also, in NJ, LAD is applicable to a business with only one employee, while the federal law doesn’t come into effect until your business has 15 employees.
Vacation Rental Insurance
When you think of New Jersey, one of the first things that probably comes to mind is the Jersey Shore. Currently, there are over 1,000 properties on the Jersey Shore just on Airbnb. If you own a rental property there or just rent your home out as part of the sharing economy, you will need vacation rental insurance. This is a type of commercial property insurance that will also give you liability protection in case a guest gets hurt.
Other Types of Small Business Insurance for New Jersey
Beyond the required coverages, your business still has certain risk exposures that you will want to make sure you have coverage for to protect your business. In 2020 alone, the average cost of a jury award for medical malpractice—a type of professional liability—was $1.8 million. The industry with the most small businesses in New Jersey is the service industry, meaning professional liability will be important for them.
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 | Is first-party coverage for property owned, typically fixed property, or contents |
Business Owner’s Policy (BOP) | Is a combination of general liability, commercial property, and usually business lost income |
Inland Marine | Is first-party coverage for tools and equipment |
Commercial Umbrella | Is excess liability coverage that provides additional limits |
Cyber Liability | Is first- and third-party coverage for losses related to data breaches, hacking, or other cyber-related losses |
Professional liability is very important coverage for New Jersey since there are so many businesses in the service industry. Professional liability insurance is a narrower type of liability that brings protection to your business for negligence related to giving advice or adhering to a contract. This is why it is also called errors and omissions insurance.
So far, all of the types of insurance discussed are liabilities. There are first-party coverages, and for businesses, the most common and important type is commercial property insurance. This insurance is almost always limited to a fixed location on the policy. Commercial property insurance can cover the following:
- A building
- Office furniture and equipment
- Inventory in a warehouse
When considering the cost of commercial property insurance, remember that commercial property comes with a deductible.
A convenient and affordable option for small business owners is a business owner’s policy or BOP. A BOP is a combination (bundle) of general liability, commercial property, and business loss income.
However, most insurance companies limit the size of the business that can purchase a BOP. Usually, only businesses with revenue under $5 million or fewer than 100 employees are eligible for a BOP. Thus, it is more suitable for a small business but not one that has over 100 employees.
Commercial property is both a type of insurance and a general term for other types of property insurance. A more common one is inland marine insurance, which is important if you own tools or equipment. Some providers will provide blanket coverage for tools and equipment, and others will require you to list down or “schedule” each item on the policy with their corresponding values.
An advantage of inland marine insurance is that the coverage follows the equipment and is not limited to one location.
Insurance policies come with a limit. But what if you’re in a risky industry? Or what if you are bidding on a project in Trenton, NJ, and your current liability limit isn’t high enough? For scenarios like that, you’ll want an umbrella insurance policy. This is an excess liability policy; hence, you will not use it unless you exceed the limits of your regular policy.
Ecommerce is becoming a regular part of most businesses, even small businesses. If you sell anything online or use a cloud to store important information, including customer data, then you shouldn’t underestimate the importance of cyber liability insurance.
Cyber liability has both first- and third-party coverage:
- First-party cyber liability coverage: This helps with the expenses you face from a data breach, including investigations and notifying anyone impacted.
- Third-party cyber liability coverage: This 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.
New Jersey Business Insurance Costs
Insurance is a contract. The insurer agrees to pay for certain losses, and you agree to pay your premium. How much the premium costs will vary because of several factors.
In our research for this guide, we obtained a variety of sample quotes from different brokers and carriers. All of the quotes were for companies with three or fewer employees and an annual revenue under $250,000.
Industry | Estimated Monthly Premium | Coverage Type | Coverage Amount |
|---|---|---|---|
Handyperson Service | $115-$420 | General liability | $1 million per occurrence, $2 million aggregate |
Restaurant | $200-$750 | BOP | $1 million per occurrence, $2 million aggregate, and $35,000 in property coverage |
Boutique | $80-$150 | BOP | $1 million per occurrence, $2 million aggregate, and $30,000 in property coverage |
Landscaping | $150-$270 | 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 New Jersey, including the specific county
- Yearly revenue and payroll
- Claims history
- Risk management and training
- Business experience
- Prior insurance history
There are more data points, too, that may surprise you. If you are renting a space, providers are interested in the age of the building, timeline of updates, building materials, and even other tenants in the building. All of these factors can lead to a claim on your policy; hence, providers take it into consideration.
How to Get New Jersey Business Insurance
Ready to purchase insurance? There are multiple ways to reach the over 400 providers in NJ. Click on the tabs below to get started:
The first option is to always go directly to an insurance company. Many will sell insurance directly to the customer, often at a discount, since there is no commission paid out to an agent or broker.
When looking for insurance, there are a few things to consider:
- What are the hours of operation?
- What does the claims process look like?
- What type of insurance options do I have when it comes to coverage for my type of business?
If you prefer a more personalized approach, then working directly with an agent is a great way to go. Agents work with an insurance company, and oftentimes for a specific insurance company, to help sell insurance. More importantly, agents can request changes to your policy and work with you through the claims process.
A broker is similar to an agent. But instead of working on behalf of an insurance company, they will work for you. Usually, a broker deals with many different carriers and provides you with insurance advice while helping you find the best option for insurance.
New Jersey Small Business Statistics: Why Insurance Is Important
Every business owner in New Jersey faces a unique type of risk, which an insurance company can handle for them—protecting their time and money. Behind every successful small business owner is an insurance policy that helps keep their operation running and covers expenses when a loss occurs through the transfer of risk from the business to the carrier.
NJ small businesses employ nearly 50% of the population
According to the Statistics of US Businesses, 49.2% of all employees (1.9 million people) are employed by a small business. With workers’ comp, this large percentage of the workforce is protected and compensated.
If someone gets injured, they can count on some form of wage payment from the insurance policy and financial assistance with their medical bills. In turn, they can keep contributing to the economy and soon rejoin the workforce through a return-to-work program.
The largest percentage of businesses exporting goods from NJ were small businesses
In 2021, small businesses exported a total value of $13.1 billion, or 37.2% of the state’s total exports. Every time a business exports a product, certain levels of liability and risk are assumed. Product liability is important for the goods themselves in case they cause a problem once purchased, and cargo insurance is important for the goods while they are in transit.
Frequently Asked Questions (FAQs)
Yes, workers’ comp is required in New Jersey. Any business with one employee must offer workers’ compensation. If your business is found to be uninsured, it can be fined or even charged with a criminal offense.
No, general liability is not required by the state of New Jersey. However, some industries, like contractors, are required to carry a liability policy to be licensed.
Yes, commercial auto insurance is a required coverage. In addition to the minimum liability requirement, New Jersey also mandates commercial auto vehicles carry personal injury protection (PIP) coverage.
In 2024, it became a law in New Jersey that all CMVs must carry a minimum of $1.5 million in liability insurance to operate in the state. This is nearly double the federal requirement for commercial trucks.
Business insurance costs vary a lot depending on the industry and specifics of the business. But a small family restaurant in New Jersey may pay between $200 and $750 a month for a BOP. A general liability policy for a landscape company can cost $150 to $270 per month.
There are 953,416 small businesses in New Jersey. A small business is defined as having 500 or fewer employees. This represents 49.2% of all employees in New Jersey.
The Department of Banking and Insurance handles insurance complaints in New Jersey. Its preferred method is to file an online complaint. However, you can call 1-800-446-7467, Monday through Friday, from 8:30 a.m. to 5 p.m.
Bottom Line
Since the merchant William Trent established Trent’s Town in 1721, New Jersey and business have gone hand in hand. With nearly 50% of all employees in New Jersey coming from about 1 million small businesses, it is clear that local small businesses play a huge part in the Garden State’s economy and culture.
Whether it is because of a bad storm off of the coast or a customer slips and falls, business insurance in NJ is an important part of keeping the wheels of commerce turning.
