There’s good reason Forbes has ranked North Carolina as the #1 state for business for 3 straight years (and in the top 5 for 12 years and counting).1 Beyond the inspiration and innovation spearheaded by the world-class universities in the Research Triangle, North Carolina is home to countless natural wonders and relatively low costs of living—for individuals and for businesses. If you’re looking for a place to start a business, the question isn’t why North Carolina, but why not? Although the Tarheel State also boasts the #1 regulatory environment rank, per Forbes, there are still some important requirements to be aware of as you set up shop in North Carolina. This guide will walk you through what you need to know about business insurance in The Old North State.

North Carolina business insurance laws

North Carolina business insurance is regulated by the North Carolina Department of Insurance (DOI), which also keeps state residents informed about all things insurance related. The most important insurance regulations in North Carolina involve:

  • Workers compensation insurance
  • Commercial auto insurance

Additionally, it’s recommended that you also consider other types of business insurance, specifically general liability and/or professional liability to fully protect your business.

Workers’ compensation insurance

In North Carolina, every business that employs three or more employees must carry workers’ compensation insurance. However, there are some key exceptions and special cases that override this general rule:

Work involving radiation – All businesses in which radiation is present must have workers’ compensation insurance, regardless of the number of employees.

Federal policies and crossover – If employees are covered under federal policies, they may not need to be covered. For instance, some railroad workers covered by federal policies but stationed in North Carolina do not necessitate workers’ compensation.

Agriculture and farm workers – These special exceptions apply to businesses in the agricultural trades:

  • If the employer has fewer than 10 full-time, non-seasonal farm workers, they don’t need to be covered.
  • Sellers of agricultural goods who are commissions-based don’t need to be covered.

Domestic workers – Employees of a household, such as cleaners or personal chefs, may not need to be covered.

Casual employment – Workers deemed casual, such as those outside the employer’s own trade, may not require coverage. Enforcement of mandatory coverage is handled by the North Carolina Industrial Commission, as well as the judicial systems in the case of lawsuits or criminal charges.
Penalties for not having the legally required workers’ comp coverage include:

Fines for lapses in coverage – Employers who fail to cover employees face a fine of $1 per employee, per day of lapsed coverage. Irrespective of the number of employees, the minimum charge is $50 per day and the maximum is 100$ per day. If you were missing coverage for your 3 employees for one year, you would still owe $18,250. If you were missing coverage for over 1,000 employees for one year, you would owe $36,500.

Criminal charges – Your lapses in coverage can also carry criminal charges, making you or whoever is in charge of insurance personally liable: Misdemeanor: If your lapse is deemed passively neglectful rather than actively willful, it could be ruled a misdemeanor. Felony: If your lapse is deemed actively willful, it could be ruled a felony.

Financial Responsibility – If an employee is injured on the job, the employer would be responsible for medical treatments and lost wages, even if you don’t have coverage. In addition to workers’ compensation, the other major required business insurance is commercial auto insurance.

Commercial auto insurance

All vehicles owned by businesses in the state of North Carolina must be covered by commercial auto insurance. The particular requirements of the coverage you need to have include:2

    Bodily injury liability:

  • $30,000 per person
  • $60,000 per accident
  • Property damage liability:

  • $25 thousand per accident

Uninsured motorist coverage of:

  • $30,000 per person
  • $60,000 per accident
  • $25,000 in property damage per accident

Recommended business insurance in North Carolina

Aside from the federal requirements across the states and the particular requirements North Carolina imposes, there are also other forms of insurance coverage that all businesses in North Carolina should have. For your business, it’s wise to consider integrating both:

  • General liability insurance
  • Professional liability insurance

Other coverages The kind of work you do, where you do it, who you do it for, and many other factors can expose you to risks outside of what those baseline plans above can cover. So, you might consider additional insurance plans, like:

  • Commercial property insurance
  • Inland marine insurance – for stored equipment and goods in transit
  • Cyber liability insurance

    General liability insurance 101

    Every business should consider a general liability insurance policy. It offers protection for the everyday risks that every business owner faces. From clients or third parties injuring themselves on your premises, to accidentally damaging someone’s property, a general liability covers various liabilities. For instance, if a third party, such as a client or customer, were to fall in your store, they could sue you. If you put up a sponsored ad on social media that offends a competitor, they might sue you for defamation. But that’s where general liability insurance comes in. It can protects you from the costs associated with third-party claims of:

    • Bodily injury
    • Property damage
    • Personal and advertising injury

    However, you can also purchase coverage related to the services you provide, which is called professional liability insurance.

    Professional liability insurance 101

    Depending on your industry, this coverage might be legally required as well—for instance, if you’re a doctor or lawyer you might need to have malpractice insurance. For any business, professional liability insurance, also known as errors and omissions, E&O insurance, is a wise consideration. It can help cover you in the case that a client claims your services are directly related to their financial loss. They could claim that you breached the contract, didn’t provide the work promised, or that your work was simply “bad.” In this case, you’d be on your own when it comes to hiring a legal team and defending yourself (even if you’re not at fault). A professional liability insurance policy protects you from the costs associated with claims of professional negligence.

    How to get business insurance in North Carolina

    When it comes to protecting your business, you need to cover all your bases. That can mean going above and beyond what’s required by North Carolina, as well as the basic liability coverage every business should consider. At Thimble, our mission is to simplify insurance solutions for small business owners like you. We work to inform you about the ins and outs of the different insurance options so you can shop for it like a pro. But we’re also committed to connecting you to coverage that’s custom-tailored to your business’ needs. That’s why we revolutionized business insurance, offering coverage that works when you do. Our business insurance plans—including both general liability insurance and professional liability insurance—can be purchased by the hour, day, or month. That’s how they stay so affordable. Purchasing an insurance policy is as simple as clicking “Get a Quote” (or downloading the Thimble app) and answering three quick questions. That’s it. That’s Thimble. So, as you get ready to launch or grow your business in the Tar Heel State, cover your bases to set yourself up for long-term success! Contact Thimble today to learn about the different insurance options available. Sources: