The Buckeye State has a strong manufacturing and export sector that is comprised mostly of small business owners. Ohio small business insurance plays an important part in the state’s economy. Business owners are required to purchase workers’ compensation and commercial auto insurance, and the other important coverages to consider are general liability, professional liability, and a business owner’s policy (BOP).
Ohio Business Insurance Requirements
There are some Ohio business insurance requirements and also some industry-specific coverages and license certifications that come with required types of insurance. Though Ohio does not have many broad statewide requirements for insurance, every business owner must keep in mind the significant risk and cost of being uninsured.
In Ohio, workers’ compensation is required for every business with one employee. This requirement applies whether the employee is part-time or full-time.
The state does have several exemptions that a business can apply for when it comes to offering workers’ comp. One is a religious exemption for employers and employees who object to the payment for insurance and receiving insurance benefits. To be qualified for the exemption, they must be a member of an Amish or Mennonite sect that has been in continuous existence since 1950.
Workers’ comp is also elective (or optional) for owners or ministers of the following entity types:
- Limited liability company (LLC) acting as sole proprietor
- LLC acting as partnership
- Sole proprietor
- Corporate office for a family farm
- An individual incorporated as a corporation
- An ordained or associate minister of a religious organization
Ministers have another layer of specialty status: if a religious organization decides to apply for an exemption status but a minister serving in that organization wishes to be covered, the minister can apply for workers’ comp separately.
It’s also important to note that Ohio is one of four monopolistic states, meaning all workers’ compensation insurance is handled directly by the state itself through a government-operated fund administered by the Bureau of Worker’s Compensation.
Because it is a monopolistic state, the coverage provided through its workers’ compensation is different. It covers medical bills, wage replacement, and death benefits for survivors. Importantly, it does not provide liability protection for employers. For that, an employer should consider purchasing stop-gap coverage from a private insurer.
When considering whether to carry stop-gap coverage, keep in mind that if your business is liable for an injured employee, not only does that mean the employee can pursue litigation against your business, but the business can also be fined by the state. Recently, a construction business in Ohio was fined $730,000 for being a “severe violator” by not maintaining a safe work environment.
In Ohio, commercial auto insurance is a required coverage for private individuals and businesses that own and operate a vehicle. The mandatory requirement only applies to liability coverage, and the minimum coverage is for liability insurance. In Ohio, you are required to carry $25,000 in property damage per loss. You must also have $25,000 per person and $50,000 per incident in bodily injury coverage.
When shopping for commercial auto insurance, remember that it is a unique type of coverage because it can carry both liability and first-party coverage or even additional insurance endorsements, such as towing and roadside assistance. You can also opt to purchase the minimum and carry liability only.
Business liability insurance in Ohio does not have a statewide requirement. However, the Ohio Department of Insurance recommends you check with local municipalities for requirements and keep in mind that many licensing boards will require proof of liability insurance.
For example, general contractors must carry a policy with a minimum of $500,000 liability policy. The Ohio Construction Industry Licensing Board has minimum insurance requirements for a range of contracting industries like heating, ventilation, and air conditioning (HVAC), plumbers, and electricians.
Local municipalities in Ohio carry their own requirements, which can make it complicated. For instance, if you are an HVAC contractor in Cleveland, you are required to carry a general liability policy with a minimum limit of $200,000 and a $25,000 surety bond. If you are an HVAC contractor in Columbus, you must have a $25,000 surety bond and a general liability policy with a minimum limit of $300,000.
It’s best if you check with your industry licensing boards and local municipal governments to see the type of Ohio business insurance requirements you may need to meet.
If your business is bidding on a project, renting space, or serving as a vendor in a trade show, you typically will need a certificate of insurance (COI) showing you have general liability in the state. General liability insurance, sometimes called a commercial general liability (CGL) policy, has broad coverage for your business from third-party claims and is focused on three areas:
- Bodily injury
- Property damage
- Personal and advertising injury
In Ohio, as elsewhere, general liability insurance often includes additional coverages, such as premise liability and product liability insurance.
Other Types of Small Business Insurance for Ohio
Ohio business insurance requirements may be similar to other states, but that doesn’t mean there aren’t other types of insurance to consider. This is especially true if the coverage in question applies to your business’ nature of operations.
Type of Coverage
What It Is
Coverage for claims of financial harm or loss as a result of advice or failure to perform a contracted service made by a third party
First-party coverage for property owned, typically fixed property or contents
Combination of general liability, commercial property, and usually business lost income
First-party covered for tools and equipment
Excess liability coverage that provides additional limits
First and third-party coverage for losses related to data breaches, hacking, or other cyber-related losses
Employment Practices Liability Insurance (EPLI)
Covers claims of wrongful termination or other harmful employment practices
Professional liability insurance in Ohio is commonly referred to as errors & omissions (E&O). It is different from general liability by having a narrower focus on what is covered. It offers business protection in areas of negligence in advice or adhering to a contract, as opposed to the more general liabilities of a CGL.
Industries in the service sector need to consider professional liability more than other businesses. If you own, for example, a financial planning or architecture firm in Ohio, this is a policy you should consider. It is an important type of business insurance because professional, technical, and scientific services comprise the largest employment industry for small businesses in Ohio.
Ohio business insurance isn’t just for liability—it is also important to protect your property. This is where commercial property comes into play. It is a first-party coverage for a business owner who owns a building, has a rented office space with furniture, or has a warehouse full of inventory.
Depending on how the provider writes the policy, it may have coverage for tools and equipment—or you may need to insure that with a separate policy called inland marine (which we cover later on).
Commercial property covers losses in two ways, and how each works depends on how the policy is written:
- Some policies are written as “all risk.” This means the policy will cover any loss that isn’t specifically excluded in the policy.
- Usually, insurance companies will write a commercial property policy as “named peril.” This means the types of losses covered are described in the policy. Typical named-peril losses are fire, theft, and vandalism.
For commercial property policies, one thing to keep in mind is coverage is almost always limited to the specific, listed location on the policy.
If your business owns property, then a BOP, is a great option for Ohio small business insurance. It is advantageous for a small business because it is a combination of general liability and commercial property. Usually, insurance carriers also include a third coverage for lost business income.
A BOP is usually more affordable because it bundles the policies; this is compared to having to purchase each one separately. Also, the BOP offers the convenience of having one policy for multiple types of coverage.
However, it isn’t necessarily for every small business. Insurers usually only offer a BOP to businesses with revenue under $5 million or fewer than 100 employees.
A good compliment to commercial property—or if you are working in an industry with tools or equipment, like a painter, contractor, or handyperson—is inland marine insurance. Like commercial property, inland marine is a first-party coverage. However, unlike commercial property, inland marine “travels” with the tools and equipment and isn’t limited to a specific location.
Some insurers will provide blanket coverage for tools and equipment, and others will have you list or “schedule” each individual item on the policy. This coverage is often offered as an endorsement for general liability insurance.
If your business is in a risky industry or you have concerns, the limits for your liability policy are not high enough, a potential solution is to purchase another form of protection known as an umbrella policy, an excess liability policy. The limits for an umbrella policy do not come into play until the limits of the other policy are exhausted.
For example, you have a general liability policy with a limit of $2 million and a commercial umbrella policy with a limit of $1 million. Once the general liability policy of $2 million is exhausted, you could file a claim for the additional $1 million in coverage from the umbrella policy.
The name for this insurance can be misleading because, despite the “liability” part of the name, cyber liability insurance is similar to a BOP. Usually, cyber liability is divided into first and third-party coverage:
- First-party cyber liability helps with the expenses you face from a data breach, which can include investigating and notifying anyone impacted.
- Third-party coverage is a type of liability that can help 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.
Finally, EPLI is an important Ohio small business insurance policy because it offers protection for your business against claims of wrongful termination, hiring, and employment practices. Examples of an EPLI claim include sexual harassment and gender discrimination.
Ohio Small Business Insurance Costs
When it comes to how much Ohio small business insurance costs, commonly known as a premium, the price will vary depending on the industry and size of the company. In our research for this article, we obtained a number of sample quotes from a variety of different brokers and carriers. All of them were for companies with three employees or fewer and an annual revenue under $250,000.
Estimated Monthly Premium
$45 to $224
$1 million per occurrence, $2 million aggregate
$53 to $58
$1 million per occurrence, $2 million aggregate with $5,000 in camera equipment coverage
$425 to $500
$1 million per occurrence, $2 million aggregate (includes liquor liability)
Cost of building and kitchen equipment
$31 to $36
$1 million per occurrence, $2 million aggregate
When evaluating the risk of a business, providers take into account a number of factors. Some of these are:
- The geographic region within Ohio, including the specific county
- Yearly revenue and payroll
- Claims history
- Risk management and training
- Business experience
- Prior insurance history
How To Get Ohio Business Insurance
When shopping for insurance in Ohio, you have a few options.
The first is to work directly with a provider, or a carrier, which is an insurance company that underwrites and services the insurance policy. When it comes to purchasing insurance from a provider, you can work directly with some while others limit the ways to purchase by working exclusively with agents or brokers.
An agent works with an insurance company and helps connect the carrier with prospective policyholders. There are some agents who are called “captive agents” and only sell insurance for one company. Others are called independent agents, and they work with multiple companies. For example, State Farm is a provider with many captive agents while Liberty Mutual is a carrier that works with independent agents.
Another option for purchasing business insurance in Ohio is by going through a broker. A broker is like an agent, except the broker works on behalf of the customer and not for the insurance company. Usually, a broker will work with many different carriers and provide insurance advice to the client while helping them find the best option for insurance.
Ohio Small Business Statistics—Why Insurance Is Important
Known as the Heart of It All, the Buckeye State has a population of nearly 12 million. This makes it the seventh-most populous state in America. The Ohio economy is competitive, and this strong economy is composed almost entirely of small businesses. Consider the following Ohio statistics:
- There are 989,435 small businesses in Ohio. This number represents 99.6% of all businesses in the state.
- These small businesses employ 2.2 million people. Another way of looking at that is that 43.8% of all Ohio employees work for a small business.
- Between March 2021 and March 2022, 29,452 businesses opened and 23,132 closed. This represents a positive gain of 6,320 Ohio small businesses.
- In 2021, 16,043 firms exported over $46 billion from Ohio. Of those, 14,244, or 88.8%, were small businesses. The total contribution to exports by small businesses was $11 billion or 23.7%
- There are 120,407 small business employees in the professional, scientific, and technical industries.
- The construction industry is another large small business employer, with 116,149 employees.
- In terms of business size, sole proprietors, or businesses with “no employees,” are by far the largest, with 810,769 employees.
- The smallest group of employers happens to be the larger small businesses with 20 to 499 employees. They employ a total number of 25,806.
As you can see, small businesses in Ohio are a significant part of its strong national and global economy.
Frequently Asked Questions (FAQs)
Yes, workers’ compensation insurance is required in Ohio for any business with one employee, be it a part-time or full-time employee. There are some exemptions for offering workers’ comp, mostly for sole proprietors and religious workers.
Ohio is one of four monopolistic states, meaning workers’ comp is offered through a government-operated fund. In Ohio, workers’ comp is handled by the Bureau of Workers’ Compensation.
Injured workers can file a workers’ comp claim with the state in several ways. They can do so by visiting the Bureau of Workers’ Compensation website, by mailing a form, faxing a form to (866) 336-8352, or by calling (800) 644-6292.
No, there is no statewide requirement for general liability insurance in Ohio. However, there are some municipalities and license boards that require general liability for certain industries, like contractors.
Yes, commercial auto insurance is required in the state of Ohio. You must maintain minimum liability limits of $25,000 in property damage per loss, $25,000 per person, and $50,000 per incident in bodily injury per loss.
Thimble states that $49.34 is the median monthly cost for business insurance in Ohio, whereas Insureon publishes that the average monthly cost for professional liability is $59. Meanwhile, Tivly states that it costs an average of $350 annually for a BOP in Ohio. These costs are all in line with the quotes we received in researching this article. For example, general liability for a handyperson was around $45 a month.
According to the Small Business Administration (SBA), there are 989,435 small businesses in Ohio. This number accounts for 99.6% of all businesses in the state.
The first step recommended by the Ohio Department of Insurance is to resolve any issues on your own. Of course, this isn’t always possible. So, if you do need to file a complaint against an insurance carrier, you can do so by visiting the Department of Insurance’s website, by mailing a complaint to it, or by calling (800) 686-1526.
Ohio has contributed many valuable things to America’s culture and the global economy; for example, if you enjoy eating buckeyes or watching football, all of these came from Ohio. The state’s economic success is driven mostly by small businesses, which is why Ohio small business insurance is important.
Simply Business understands the importance of insurance while making it simple and affordable to purchase insurance online. In 10 minutes or less, you can compare quotes in real-time from top insurers, modify coverages, and purchase a policy online or call to speak to one of its agents.