Connecticut business insurance requirements

Before starting your business in Connecticut, make sure you're set up for success with the right business insurance. We break down what's required and what's optional.

Connecticut Business Insurance | Thimble
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The Constitution State is a phenomenal place to live. The low crime rate, strong schools, and beautiful natural features make it a key destination for those living and working in the tri-state area—and nationwide. But it’s also a fantastic place to start up or move a business. After all, the state motto indicates that “transplants sustain.”

Connecticut’s other nickname, the Nutmeg State, has less to do with nature than the state’s colonial era peddlers. These journeymen’s legacy lives on today. Per its 2020 Small Business Association 1 profile, Connecticut’s 350,376 small businesses dominate 99.4% of all in-state business. To take part in that culture, you’ll need to get insured.

Mandatory insurance for Connecticut businesses

The State of Connecticut Insurance Department (CID) oversees all insurance in Connecticut, including both personal and commercial insurance.

Like most other states across the US, Connecticut legally requires two main forms of insurance coverage for all businesses operating in-state that fall within a certain criteria:

  • Workers’ compensation insurance
  • Auto insurance

However, these aren’t the only forms of insurance coverage you’ll want for your Connecticut business. In the sections that follow, we’ll detail legal requirements first, then walk through other business insurance recommended for Connecticut companies. Finally, we’ll go over a solution to simplify all your business insurance needs.

Connecticut workers’ compensation insurance​

The Workers’ Compensation Act2 defines all requirements and regulations in Connecticut. The Workers’ Compensation Commission (WCC) administers the Act. The WCC ensures workers are covered when hurt and employers are protected from the one-two punch of financial impact accompanying physical injury.

In practice, nearly all businesses in Connecticut need to carry workers’ comp coverage for all employees—even if they have just one employee. Per the Act, specific exceptions include:3

  • Some sole proprietors and non-employee owners or members of LLCs, partnerships, and certain other small business organizations.
  • Employers of household workers who work fewer than 26 hours per week

Another niche exception exists for businesses with abundant funds. Per section 31-2844, an employer can also prove to the WCC that they’re able to directly pay workers’ compensation benefits without an insurance policy, or through self-insurance.

For most businesses, it makes the most sense to shop around for the best deal on workers’ compensation coverage from insurers licensed in Connecticut. If an employer doesn’t carry coverage and can’t self-insure, the WCC can issue a stop work order and fines of up to $250 dollars per offense. Penalties are detailed in section 31-288.5

Auto insurance

If your business owns or leases one or more vehicles, you’ll need to insure them, just like every other driver on the road. And, depending on the type of work you do with your personal vehicle, you might need to obtain commercial auto insurance too.

Similar to commercial auto rules in many other states, Connecticut’s requirements for auto insurance are the same for businesses as they are for personal drivers.

Unlike some other states, Connecticut doesn’t require businesses to carry personal injury protection (PIP) to cover costs incurred by the driver of your company’s car. But it used to! Even though it’s no longer required, PIP is still a sound investment.

Likewise, the CID recommends purchasing higher limits than the required minimums. Crashes can easily incur well over $50,000 dollars in injury or damage to third parties, so it’s wise to maximize coverage.

Note: The fact that you use your car for work doesn’t necessarily mean you’ll need to take out commercial auto insurance. Some work-related activities may be covered under a personal auto policy. Often, it comes down to who owns the vehicle, the size of the vehicle, and whether it’s used to transport people and/or property.

Recommended liability insurance for Connecticut business owners

Every business, in Connecticut and elsewhere, faces risks. Insurance doesn’t take risks away, but it can help alleviate costs when things go wrong.

For example, one of the biggest risks all businesses face are third-party claims. If a client is harmed physically or financially, he or she could sue your business. And whether or not you’re actually in the wrong, this can have financial ramifications.

That’s why you need liability coverage:

Professional liability coverage – Covers claims about advice you gave clients (or neglected to) that they say caused them financial harm. It can provide legal investigation, defense, and settlement for cases involving:

  • Negligence, actual or alleged
  • Errors and omissions

General liability coverage – Covers claims about physical or other personal injuries third parties say they sustained as a result of your work. It can provide legal investigation, defense, and settlement for cases involving:

  • Bodily injury
  • Property damage
  • Personal and advertising injury

Business equipment protection insurance –This type of coverage protects your equipment while you’re using it, meaning you can safeguard against the financial impact should your tools break on the job.

In some locations within Connecticut, businesses in certain fields may be legally required to carry liability insurance. In other cases, clients may expect you to have liability coverage. Carrying it can give you a competitive edge.

How to get Connecticut small business insurance ​

Connecticut is a great place to be a business owner. But whether you’re just starting up anew in the Constitution State or moving an existing business there, you’ll need to secure the proper insurance. To recap the coverages you’ll probably need to take out if you have employees and use a vehicle for work, they are:  

  • Workers’ compensation insurance
  • Auto insurance

Plus, you’ll also want to insure your business with general liability insurance. For that, we’re here to help.

At Thimble, we believe all businesses should have access to insurance that’s customized to their very needs. We also believe it should be affordable and easy. So, we’ve made it our mission to upgrade insurance for the 21st century.

When you buy insurance with Thimble, you can get coverage by the hour, day, or month. Our coverage works when you do, keeping prices down. Plus, signing up is as simple as downloading the Thimble mobile app or clicking on “Get a Quote,” then answering a few simple questions. From there, we’ll generate an instant quote which you can purchase immediately.

Additionally, our monthly general liability plans come bundled with an optional business equipment protection add-on. So, if you’re a Connecticut professional that relies on your tools to get the job done, you can protect your equipment too.

Yep. Protecting your Connecticut small business is that easy. At Thimble, we too believe that transplants sustain. Sustain their small businesses, that is!

Good luck with your venture in the Nutmeg State! We’re rooting for you.

Sources:

  1. U.S. Office of Small Business Administration. Connecticut Small Business Economic Profile. 
  2. Workers’ Compensation Commission. Workers’ Compensation Act. 
  3. Nolo. An Employer’s Guide to Workers’ Compensation in Connecticut. 
  4. Workers’ Compensation Commission. Sec. 31-284. 
  5. Workers’ Compensation Commission. Sec. 31-288. 

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.

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