Pennsylvania business insurance requirements

Before starting your business in Pennsylvania, make sure you're covered with the right types of business insurance. Use this guide to find out what's required and what's recommended.

Philladelphia City Hall Clock Tower, Pennsylvania
Running a small business is a risky proposition. Fortunately, there are steps you can take to minimize your risks and shift the odds in your favor. Small business insurance, for instance, is a direct safeguard that mitigates the chances of a mishap damaging your financial health.

In addition to insurance that is beneficial for your business, there are also certain policies that are legally required for you to have as a business owner. In which case, what are the laws surrounding business insurance in Pennsylvania? And what other policies should you consider as a small business owner? Let’s find out!

Pennsylvania business insurance laws

Like most other states, Pennsylvania has business laws that mandate a small business owner have two types of insurance coverage:

  • Workers compensation insurance
  • Commercial auto insurance

Although not required by law, you may also want to consider other types of business insurance, specifically general and professional liability insurance. After all, your business is your livelihood and it’s important to protect it.

Workers' compensation insurance

Every state besides Texas mandates a business to have workers’ compensation. This policy protects both the business and its employees should they get injured while working (whether in office or on-the-go). For most states, there’s a minimum number of employees for required coverage to be enforced. Typically, this ranges from 1-5 employees.

But if you have at least one employee in Pennsylvania, you’re required to purchase coverage.

A workers’ comp policy can help protect a business from claims of negligence and helps cover the costs of a workplace accident, including:

  • Medical bills and treatment
  • Rehab
  • Disability
  • Lost wages

According to Pennsylvania’s Department of Labor & Industry there are some exceptions, including:1

“People covered under other workers’ compensation acts, such as railroad workers, longshoremen and federal employees; domestic servants (coverage is optional); agricultural workers who work fewer than 30 days or earn less than $1,200 in a calendar year from one employer; and employees who have requested, and been granted, exemption due to religious beliefs or their executive status in certain corporations.”

Commercial auto insurance

Any business-owned vehicle in Pennsylvania must have commercial auto coverage insurance, especially if they use a vehicle to move clients or employees, drive to and from work, or carry business equipment.

Typically, a commercial auto insurance policy covers:

  • Medical payments
  • Uninsured motorists
  • Collision coverage
  • Comprehensive coverage
  • Loading and unloading coverage

Pennsylvania state law orders that a commercial auto policy have the following minimum policy limit coverages:

  • Bodily injury liability – $15,000 per person and $30,000 per accident
  • Property damage liability – $5,000 per accident
  • Medical benefits – $5,000 minimum

Although you aren’t required to, it’s smart to have hired and non-owned auto insurance coverage (in addition to commercial auto insurance) if you or your employee drives their car for work purposes. Many people don’t realize that a personal auto policy doesn’t cover work activities.

Optional liability insurance in Pennsylvania

While there are only two forms of business insurance coverage that is legally required in Pennsylvania, there are other types of insurance that are well worth considering, including:

General liability insurance

Every business in Pennsylvania should have general liability insurance even if it’s not legally required.


Because it protects you from a variety of risks that your business likely encounters on a daily basis. A general insurance policy will include liability coverage for third-party claims of:

  • Bodily injury
  • Property damage
  • Personal and advertising injury

For instance, if you’re a handyman, you have to regularly make house calls and work at and on people’s homes. Should you or your equipment accidentally damage a client’s property, you could be held liable. The same phenomenon applies to all businesses that meet and interact with their clients in person.

Professional liability insurance

Professional liability insurance, also known as errors and omissions (E&O) insurance, helps to cover the damages and defense for professionals who provide clients with their expertise. If a client claims that a business’ advice caused them financial loss, then the business can be held liable for professional negligence.

Common professions that benefit from this type of insurance include:

  • IT consultants
  • Translators
  • Graphic designers
  • Computer programmers
  • Marketing consultants
  • Writers
  • Instructors
  • Guides

For example, if you’re an IT consultant, you may be hired to help build a company’s cyber defenses. Should a cyber breach occur, you could still be held liable for the damages you failed to prevent.

Cyber liability Insurance

Increasingly more businesses rely on their web presence to function in a 21st century business environment. Whether running a website, storing data, or communicating with partners and clients, many processes run digitally. Naturally, this puts your business at risk of a cyber attack.

If a hacker successfully breaches your system, a data breach or IP theft could have major impacts on your bottom line and business reputation. This is why many businesses in Pennsylvania have some form of cyber liability insurance. Should a cyber attack occur, it can help cover the following expenses:

  • Business interruption
  • Client notification
  • Fraud monitoring
  • Legal fees, settlements, and judgments
  • Ransomware payments

Commercial property insurance

Does your small business rent or own the building you operate out of? Do you carry pricey equipment or costly inventory? Commercial property insurance was created to protect a business’ building, equipment, and inventory from the following perils:

  • Theft
  • Vandalism
  • Smoke damage
  • Fires

If you worry about other “acts of God” like a hurricane, you may be required to tack on an additional named perils coverage policy.

How to get Pennsylvania business insurance

Don’t have a general liability or professional liability insurance? Thimble offers insurance for the modern small business. It’s insurance that works when you do. Our affordable, on-demand insurance policies go by the hour, day, or month. This means you can tailor your plans to exactly when you’re working, so you never pay more than you need to.

But how do you get started?

You can sign up for an insurance policy with Thimble in less than 60 seconds. Input a few details about your business, and we’ll generate your free quote on our different insurance solutions. Click to purchase and your Certificate of Insurance (COI) will be waiting for you in your email inbox.

Getting the insurance coverage your small business needs has never been so fast and easy. Talk to one of our representatives to learn more about our insurance solutions.

Although small business owners in Pennsylvania are only legally obligated to purchase two types of insurance (workers’ comp and commercial auto) there are many more types of insurance you should consider.

Working together, these policies provide you with liability coverage from all possible angles. And by taking these precautions, you can ensure that your business and its employees are free to work confidently knowing that they’re protected from risk.


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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