With a booming tourism industry, ample agricultural resources, and some of the most beautiful vistas in the U.S., Hawaii is a great place to be a small business owner.

But whether you own a coffee shop or a cleaning services company, small business owners take on risks, even in the Paradise of the Pacific. From unexpected obstacles to potential client lawsuits, successful entrepreneurs should always expect the unexpected.

One way to set the stage for long-term success is by having the right types of insurance in place. And beyond what’s legally required, it’s also smart to take out policies that can help safeguard your finances if something does go wrong. Below, we’ll cover the kinds of insurance coverage your small business needs to thrive in the Hawaiian sunshine.

Required business insurance in Hawaii

Like most other states, Hawaii mandates two kinds of insurance that affect businesses:

Workers’ compensation coverage – Most Aloha State businesses that have one or more employees must take out workers’ compensation. Exemptions apply to single-member businesses and members in a partnership. Likewise, you may be exempt if your employees fall into one of the following categories:

  • Volunteers and unpaid workers
  • Some religious clergy
  • Domestic workers making less than $225 per quarter
  • Real estate salespeople
  • Students working for room and board

Auto liability coverage – If you don’t use a car for work, then you may not need commercial auto coverage and your personal auto coverage may suffice. Otherwise, depending on what you use your vehicle for, you might need it.

Think you’re exempt from these kinds of insurance? Always consult your local regulatory bodies to be sure. Then, skip ahead to our section on optional insurance! Otherwise, read on to learn the ins-and-outs of these two kinds of insurance coverage.

Hawaii workers’ compensation insurance

Why do you need workers’ comp insurance?

This kind of policy helps protect a business from the financial costs of an employee becoming injured, ill, or disabled while on the job. It serves as a de facto agreement among the insurance provider, employer, and employee to provide coverage related to the illness or injury, thus eliminating costly lawsuits.

Instead, workers’ comp insurance will help cover the following kinds of costs:

  • Medical bills
  • Cost of treatment
  • Lost wages during illness, rehabilitation and retraining

What happens if you don’t cover your employees with workers’ comp? It could result in a costly lawsuit from your employee, not to mention fines from the state.

Hawaii businesses must pay $100 per employee per day that they do not have workers’ compensation insurance.1 That means that leaving your sole employee uninsured for just a week could cost $700 in fines.

Taking out workers’ compensation is the smartest choice for your business and for your employees.

Hawaii auto insurance

Car insurance is required in Hawaii for personal and business use; however, you may not need commercial auto insurance coverage if you drive your personal vehicle for work. As a general rule of thumb, if you only use your vehicle to drive to and from jobs your personal policy may be enough. However, if you transport people or products as a key function of your business, you may need commercial auto coverage. Additionally, business-owned vehicles need a commercial auto policy. We know this can be a little confusing so let’s look at two scenarios.

Jenny is a florist who does home deliveries. Her car is essential to transporting her goods (beautiful floral arrangements) to her customers. As such, Jenny may need commercial auto coverage.

Kyle is a surf instructor who works for various hotels teaching guests how to surf. He stores surfboards at each hotel and never drives students. For Kyle, his personal auto policy likely covers him as he drives to and from each job.

Make sure you’re fully protected and talk with your auto insurance provider to ensure you’ve got the right coverage.

Other types of small business insurance

Beyond the legally required coverage, small businesses in Hawaii can benefit from taking out other insurance coverages.


Because people can be litigious (even in the peaceful island breeze). Someone doesn’t need to have a good case to bring a lawsuit against you or your business. In the meantime, expensive attorney’s fees could significantly impact your bank account, even if you’re ultimately cleared of wrongdoing.

Next, we’ll take a closer look at the kinds of business insurance we recommend for Hawaii entrepreneurs:

General liability insurance – This kind of insurance can provide coverage in the event that a client or other third party (a bystander, for example) experiences an adverse incident while interacting with your business. General liability can provide investigation, defense, and settlements for damages resulting from third-party claims of:

  • Bodily injury
  • Personal injury
  • Personal and advertising injury

Professional liability insurance – Also called errors & omissions (E&O), professional liability insurance can provide coverage in the event that a client accuses you of errors or negligence arising out of your professional services that resulted in their financial loss. Like general liability, this kind of insurance can provide defense and pay for damages resulting from claims.

Cyber insurance – Are you surprised to hear that being responsible for the loss your client’s data might not be covered under most errors & omissions policies? The unique risks you take on when doing business online require their own kind of insurance. Cyber liability provides coverage for first-party injury—that’s injury to you!—and can help pay for the cost of data repair and business interruption. It also covers third-party injury, i.e., defense and damages for client lawsuits resulting from a data breach.

Commercial property insurance – While general liability insurance provides coverage for your client’s property, it doesn’t cover your own property. In Hawaii, adverse weather conditions could potentially damage your business premises as well as the property inside. Commercial property insurance can help you to repair or replace damaged property, and it may also help cover business interruptions

Say aloha to a safeguarded business

As a small business owner, you have enough on your plate without worrying about insurance. Just remember the basics:

  • Businesses with more than one employee must take out workers’ comp (unless an exemption applies).
  • Consider commercial auto insurance if your business owns a car or if you use your own car for work purposes.
  • Consider general liability insurance, professional liability insurance, cyber insurance, and commercial property insurance to help protect your business from other risks.

General liability and professional liability insurance via Thimble are designed to help small businesses like yours take out the coverage they need, when they need it.

With Thimble, you can get insured in less than 60 seconds. Just click on “Get a Quote” or download the Thimble mobile app. Breeze through a few quick questions about your business and select a policy length (pay by the hour, day, or month). Then we’ll generate an instant quote. From there, you can purchase with one final click and you’ll have a policy and as many Certificates of Insurance as you need waiting in your email inbox.

At Thimble, we take the hassle and confusion out of insurance.


  1. Hawaii Department of Labor and Industrial Relations. Significant Increase in Labor Law Penalties.