Whether starting a new restaurant in Richmond, running an ice cream food cart at Virginia Beach, or operating a bed and breakfast in the Shenandoah Valley, small business insurance will be a critical part of your business plan.
Virginia business insurance requirements are workers’ compensation and commercial auto. Some industries require general liability, too, for licensing. VA business insurance costs vary depending on your business’ industry, size, and location.
Virginia Business Insurance Requirements
Like nearly every state, Virginia has legal requirements for workers’ compensation and commercial auto insurance. However, its workers’ comp requirements are broader than those of other states, and the commercial auto minimum coverage requirements are set to change in 2025.
Workers’ Compensation
In Virginia, workers’ compensation insurance is required. The coverage carries liability protection for the employer as well as benefits for the employees. For employees, workers’ comp helps with their medical bills, lost wages, and return-to-work programs for those who have been injured or become ill because of their work.
Companies with two or more employees must offer workers’ compensation insurance. In VA, the definition of employee is very broad, which includes the following:
- Part-time employees
- Seasonal employees
- Temporary employees
- Minors and trainees
- Family members
Virginia has no reciprocity agreement with other states. This means that if your business is located in another state and has employees working in VA, you are required to follow Virginia’s workers’ comp laws.
Commercial Auto Insurance
Small businesses in Virginia that own a vehicle are required to have commercial auto insurance. VA’s minimum commercial auto insurance requirements are for bodily injury and property damage.
- Bodily injury: $30,000 per person and $60,000 total per accident. Bodily injury covers injuries or even death in an accident when your business is at fault.
- Property damage: $20,000 per accident. Like bodily injury, this is a liability coverage that will handle the damages caused in an accident when you are at fault.
These are relatively low limits, given the current costs of medical care or vehicle repair. In 2025, the limits are increasing.
- Bodily injury: $50,000 per person and $100,000 total per accident.
- Property damage: $25,000 per accident.
There is a note on the Virginia DMV website that business owners can opt for a surety bond instead of insurance. There are no further details, but the surety bond amount would likely need to match the minimum limits.
For commercial vehicles (CMVs), Virginia has higher limits. CMV coverage is dependent on the weight of the vehicle.
- $50,000 for cargo on the vehicle
- $300,000 in liability for vehicles weighing between 7,500 lbs and 10,000 lbs
- $750,000 for vehicles that weigh over 10,000 lbs
These limits are for vehicles that are driving only within Virginia. If a CMV is involved in interstate trips, it is subject to the federal requirements for commercial vehicle insurance.
General Liability Insurance in Virginia
The most common type of Virginia business insurance is general liability. As its name implies, it offers a broad range of coverage. There are three primary areas of coverage:
- Bodily injury
- Property damage
- Personal and advertising injury
But that’s not all that general liability usually covers. Most insurance companies include medical payments, premise liability, and product liability insurance. Endorsements, like tools and equipment, can expand general liability coverage.
Beyond the required coverages of commercial auto and workers’ comp, there are some industry-specific requirements.
- HVAC technicians: Those based in Virginia must carry general liability coverage to perform work legally. The Virginia Board of Contractors does not require applicants to have a bond to apply for a contractor license.
- Daycares: Must have a general liability policy with a minimum limit of $500,000.
While I could not find any sort of specific requirement for contractors, if you’ve ever bid on a job, then you know you’ll have to show proof of insurance.
And keep in mind that many local municipalities require insurance to work with them. The point? Check the licensing boards for your industry and with local municipal governments to make sure your business complies with any Virginia business insurance requirements.
Other Types of Small Business Insurance for Virginia
Even if the law doesn’t require it, that doesn’t mean there aren’t coverages that are either helpful or borderline necessary for small businesses.
Type of Coverage | What It Is |
|---|---|
Employment Practices Liability | Liability protection for employers from employment discrimination-related claims |
Rental Property Insurance | Commercial property policy that offers liability and lost business income |
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 |
This insurance, regularly abbreviated EPLI, is labor-centric coverage for employers. It gives them protection against allegations of wrongful termination, discrimination, and harassment, including in the hiring and firing elements of employment.
When you think of Virginia, one of the first things that probably comes to mind is Virginia Beach and the Blue Ridge Parkway. If you own a rental property or rent your home out as part of the sharing economy, you will need vacation rental insurance. This type of commercial property insurance gives you liability protection in case a guest gets hurt.
The largest industry for small businesses in Virginia is professional, scientific, and technical services, making professional liability a very important coverage for Virginia. Professional liability insurance is a type of liability for claims of negligence related to giving advice or adhering to a contract. It is also called errors and omissions (E&O) insurance.
Commercial property is a first-party coverage that 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
Commercial property is also like an umbrella term with many different types of property policies for small businesses. Property policies come with a deductible, the amount you agree to pay per claim before the insurance company covers the loss.
If you need general liability and property, then consider a business owner’s policy. This is a combination of general liability, commercial property, and business loss income. A BOP is usually more affordable than purchasing each policy on its own.
This is a type of property insurance that is important if you own tools or equipment. A key difference between inland marine and commercial property is that inland marine insurance follows the equipment and is not limited to one location.
All insurance policies come with a limit or the total amount they will pay out. If you’re in a risky industry and bidding on a project, but your current liability limit isn’t high enough, what can you do?
One viable option is to carry an umbrella policy. Umbrella policies are an excess liability policy. This means that you will not use it unless you exceed the limits of your regular policy. But that’s why it works well for providing extra coverage without trying to find a policy with a higher limit.
Commerce is increasingly digital; thus, protecting your small business—including information stored in the cloud or online transactions—is important. Cyber liability insurance is a newer coverage but one that is increasingly important for small businesses in Virginia.
Like a BOP, cyber liability has both first- and third-party coverage. First-party cyber liability is more focused on expenses to handle a cyber incident, while third-party is related to costs from negligent actions.
- 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.
Virginia Business Insurance Costs
Insurance is a contract. The insuring agreement lays out the terms where the policyholder agrees to pay the premium, and in exchange for the premium, the insurer agrees to pay for certain losses.
In our research for this guide, we obtained some 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. The goal here is to provide you with an estimated amount of how much VA business insurance costs.
Industry | Estimated Monthly Premium | Coverage Type | Coverage Amount |
|---|---|---|---|
Electrical | $56-$150 | General liability | $1 million per occurrence, $2 million aggregate |
Restaurant | $42-$81 | BOP | $1 million per occurrence, $2 million aggregate, and $35,000 in property coverage |
Boutique | $40-$42 | General liability | $1 million per occurrence, $2 million aggregate |
Photography | $15-$29 | General liability with an equipment endorsement | $1 million per occurrence, $2 million aggregate, and $5,000 for equipment |
When determining the premium, insurance companies consider a number of different data points about your business. Some of the more important ones are as follows:
- The location of your business
- Anticipated revenue and payroll
- Your claims history
- Risk management and staff training
- Years of business experience
- Specific industry of the business
How you answer these questions will have an impact on your premium.
How to Get Virginia Business Insurance
Now that you’ve got an idea of the types of business insurance in Virginia that are required or helpful, maybe you’re ready to purchase a policy. The good news is that you’ve got different ways to get covered.
Insurance Provider
The first option is to work directly with an insurance company. Many, like Next Insurance, will sell directly to the customer. The policies usually come with a discount, since there is no commission paid out to an agent or broker.
When looking for insurance, here are a few things to consider:
- What are the hours of operation for claims reporting?
- What does the claims process look like?
- Who handles the claims?
- What type of insurance options do I have when it comes to coverage for my type of business?
- What is the company’s financial rating?
Agent
An agent is a great way to go if you prefer a more personalized approach and have a point of contact throughout the life cycle of your policy. Agents can be independent, meaning they can work for multiple companies, or they can be captive, meaning the agent works for one insurance company. Agents can request changes to your policy and work with you through the claims process.
Broker
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.
Virginia Small Business Statistics: Why Insurance Is Important
While the Old Dominion state, with its close proximity to Washington, D.C., has large corporations, that doesn’t mean small businesses aren’t an essential part of its economy. As you’ll see, from employment to export, small businesses play an important part in the Virginian economy.
In a state with 8.6 million people and an employment rate of 61%, small businesses are a key driver of employment. The 818,450 small businesses, representing 99.5% of all businesses in Virginia, employ 1.6 million people or 45.4% of all employees.
The largest industry for small businesses in Virginia is professional, scientific, and technical services. For those industries, professional liability will be a very important coverage to purchase. The second largest industry is construction, and warehousing is third. General liability will be an essential coverage for these two industries.
Many of these businesses are very small, with revenue of $1 million or less. Approximately 1/3 of the small businesses have no employees. Per Virginia’s requirements, that means 2/3 of the small business employees in Virginia need workers’ compensation.
The total exports in 2021 were $19.2 billion. Out of that amount, $6.9 billion, or 35.8%, came from 6,119 small business exporters. Export businesses need cargo insurance and property insurance for the warehouses storing the product that is exported.
Aside from the legal requirements of some coverages, there are practical considerations for insurance. You will be hard-pressed to find a lending organization providing a loan without your business being insured. To bid on a job with the state, local municipality, or even a private project, you must show proof of insurance.
Frequently Asked Questions (FAQs)
Yes. Between March 2021 and 2022, 34,432 opened in Virginia, and 27,119 closed, resulting in a 7,313 business increase. A total of 59,438 establishments expanded employment.[1]
Yes, workers’ comp is required in Virginia. Any business with two employees must offer workers’ compensation. Employee is defined as part-time or full-time, temporary, seasonal, or even a family member.
No, general liability is not required in Virginia. However, some industries, like HVAC contractors, must carry a liability policy to be licensed.
Yes, commercial auto insurance is a required coverage. Commercial auto carries a minimum liability requirement, but there are no requirements for personal injury protection.
In 2025, the minimum liability limits for auto insurance will increase to $50,000 per person, $100,000 per incident for bodily injury, and $20,000 for property damage.
Virginia small business insurance varies, but a photographer will pay around $15 to $30 a month for general liability. A small restaurant can expect about $41 to $80 a month for a BOP.
There are 818,450[1] small businesses in Virginia, which makes up 99.5% of the state’s businesses.
You can file a complaint by email or by calling the Virginia State Corporation Commission directly. For property and casualty complaints, call 804-371-9185. For life and health complaints, you will want to call 804-371-9691. You can also reach both departments toll-free at 1-877-310-6560.
Bottom Line
For the Virginia economy, small businesses are essential, providing nearly half of the employment, over 30% of the exports, and 99% of the total businesses. VA business insurance is mostly invisible, keeping businesses running when there’s a loss, protected when there is a claim, and compliant with the government for Virginia business insurance requirements.
