From the boardwalks that Frankie Valli immortalized to the stomping grounds of the Rat Pack in Newark, New Jersey has a long history of living up to its motto, “Liberty and Prosperity.” With an enormous economy, a vibrant, diverse, and growing working age population, and close proximity to other decent business states next door, New Jersey may be the ideal place to start and grow your business. But before you plant your seeds in the Garden State as a business owner, it’s important to know what kinds of requirements and regulations there are for things like licensing, business practices, and insurance. This guide will walk through the latter, bringing you up to speed on New Jersey’s business insurance laws and what kind of insurance is recommended.
New Jersey business insurance laws
Insurance in New Jersey is governed by The Department of Banking and Insurance, specifically its Division of Insurance. The division’s main functions involve both insurance producers (providers) and consumers (individuals and businesses). The division licenses and regulates insurance producers and products while also educating consumers about requirements and options. As with many states, some of the most important requirements for business insurance in New Jersey involve two main policies:
- Workers’ compensation insurance
- Commercial auto insurance
In addition, there are optional (and highly recommended) types of business insurance to fully protect your business, including:
- General liability insurance
- Professional liability insurance
Let’s take a look at each one in detail.
Workers’ compensation insurance
Every business in New Jersey that has employees must carry workers’ compensation insurance to protect both the employer and employee in the event of a work-related injury. This requirement applies to all part- and full-time employees, but the following workers do not require insurance coverage: Non-employee workers, such as:
- Freelancers and (sub)contractors
- Interns and volunteers
- Self-employed workers and independent contractors
- Sole proprietors, partners, and LLCs with no other employees
- Employers covered by federal or other overlapping programs
Failure to comply with these requirements can result in a number of consequences for businesses in New Jersey. Administered by The Department of Labor and Workforce Development, these consequences include:Criminal charges – Failing to provide insurance coverage for an employee is considered a disorderly persons offense and can result in criminal charges (up to a felony). Financial penalties – Even outside of actual incidents, simply failing to provide workers’ compensation insurance for employees incurs financial penalties:
- Up to $5,000 for the first 10-day period of lapsed coverage.
- Up to $5,000 for each 10-day period of lapsed coverage after the initial period.
Direct liability – In the event of an injury or death, your business (and person, in some cases) will be directly financially and legally responsible, even if you don’t have coverage.
- Penalties can extend to corporate officers’ personal assets.
- Settlements and jury awards can also be enforced on personal assets.
However, the other major insurance requirement for businesses in New Jersey is commercial auto insurance.
Commercial auto insurance
In New Jersey, all vehicles owned by a business require commercial auto insurance coverage. That’s true of many states, but the specifics of what’s needed in New Jersey are:
- Bodily injury liability of $15,000 per person, $30,000 per accident
- Uninsured motorist bodily injury liability coverage of $15,000
- Property damage liability of $5,000 per accident
Recommended business insurance in New Jersey
In addition to various federal requirements and mandates at the state level, there are several other coverages that all businesses in New Jersey should consider. For the majority of businesses, the two most important kinds of plans outside of requirements are:
- General liability insurance
- Professional liability insurance
Specialty coverages Depending on the nature of your business, such as the spaces it inhabits and the work you and your employees perform, you might want additional protection. Some of these include:
- Commercial property insurance
- Inland marine (equipment or storage) insurance
- Cyber liability insurance
By combining additional coverages with general and professional liability, along with coverages New Jersey requires, you create greater safeguards for your business. This allows you to work with the confidence and peace of mind you deserve.
General liability insurance 101
General liability insurance is a policy that protects you against the various risks associated with doing business, such as having an office space and interacting with clients. These risks can be both within and outside of your control. No matter how careful you are, If third parties (like clients or customers) were to be physically harmed in your store, or if they claimed personal injury from an ad you put out, they could sue you. But that’s what general liability insurance is for. It protects from third-party claims of:
- Property damage
- Bodily injury
- Personal and advertising injury
In addition to general liability insurance, you may also want to protect yourself from the risks associated with the specific work you do. In that case, you’d need professional liability insurance.
Professional liability insurance 101
Often referred to as errors and omissions (E&O) insurance, professional liability insurance protects you from the financial implications of a client’s claims about the work you perform for them. The kinds of lawsuits and ensuing costs covered include:
- Lawsuits over work that’s late or missing
- Lawsuits over work that’s incomplete or flawed
- Damages your client wants reimbursed
In essence, if a client claims that your work caused them financial loss, they can sue you for negligence. Without insurance, you’d be left to hire your own legal team and defend yourself, then you’d be responsible for any court-ordered payouts or settlements. A professional liability insurance policy protects you against the financial burdens of a claim.
How to get New Jersey business insurance
At Thimble, we’re dedicated to making insurance simpler for every small business owner across the U.S. That includes both providing helpful guides to help you understand insurance topics (like state-specific requirements) and connecting you to insurance plans that are robust, flexible, and accessible. We offer general liability and professional liability insurance that protects you from the various risks outlined above. But we’ve also revolutionized the insurance game by enabling you to purchase coverage by the hour, day, or month. It’s insurance that works when you do. Just click on “Get a Quote” or download the Thimble app, answer a few simple questions, review your quote, and purchase. From there, you’ll have a Certificate of Insurance (COI) waiting for you in your email inbox. All of this can be done in less than 60 seconds. It’s that fast. It’s Thimble. As you’ve learned from this guide, there are two primary forms of insurance you need in New Jersey: workers’ compensation (if you have employees) and commercial auto insurance (if your business owns a vehicle). In addition, you’ll want to protect yourself from the various risks associated with the workplace and the services you render. For that, we’re here to help.