This article is part of a larger series on General Liability Insurance.
TABLE OF CONTENTSAppropriately named the Garden State, New Jersey’s robust small business economy includes nearly 10,000 farms. Whether it is a farm or a transportation company, small businesses are a significant part of New Jersey’s growing economy—driving small business insurance in New Jersey as a key part of a successful business plan.
While not every coverage is required, NJ does have some strict requirements on commercial auto and commercial truck insurance, as well as workers’ comp. Because of its laws, small businesses should consider other coverages, like employment practices liability.
Any NJ small business insurance guide will need to touch on requirements for the state. As is the case for nearly every state, the primary requirements for small business insurance in New Jersey are workers’ compensation and commercial auto insurance. However, some important nuances of the law affect the types of coverage you both need and should seriously consider. Click on the tabs below to learn more about these requirements:
Workers’ compensation insurance is the only nationally required small business insurance and is required in New Jersey. This type of insurance benefits both the employee and the employer—covering critical medical bills, lost wages, and other legal costs. It helps employees if they become ill or injured on the job by paying them some form of wage replacement, taking care of medical expenses, and even providing return to work and temporary jobs.
In the unfortunate case where an employee dies as a direct result of their job, workers’ comp will make a death benefit payment to the family. According to the US Bureau of Labor Statistics, there were a total of 116 workplace-related fatalities in NJ—proving how crucial workers’ comp is to every employee, regardless of the industry and state.
The requirement for New Jersey is very simple: every company with one employee is required to provide workers’ compensation insurance. However, there are some additional details that you need to know:
There is one exception to purchasing workers’ comp in New Jersey. You can opt to be self-insured. However, you have to prove your business has the financial resources to handle worker comp claims and then be approved by the state for self-insurance.
You also have to have a plan for handling claims and decide on paying an insurance company to handle your claims or a third-party administrator.
There are currently more than 400 different carriers licensed to sell workers’ comp in New Jersey, so you have plenty of options when looking for insurance.
NJ takes workers’ comp seriously—it is the first state I’ve encountered to criminalize not providing workers’ comp. If, after an investigation, it is determined the lack of workers’ comp at your business was willful, it is a crime of the fourth degree. Penalties can also be incurred at $5,000 for the first ten days and then $5,000 for each ten-day period without coverage. If it is a corporation, corporate officers can be individually fined if the business is uninsured.
And in case you’re thinking they’ll never know, NJ does regular investigations. It conducts what it calls “cross-matching” with multiple different state agencies to see if a business shows up on one but not on another list of businesses offering workers’ comp. Not only is being uninsured in New Jersey financially risky, but you may also end up being charged with a crime.
The other type of small business insurance required in New Jersey is commercial auto insurance. NJ’s minimum commercial auto insurance requirements include the following:
While these are minimum limits, they are extremely low. For example, $5,000 in property damage means if your vehicle is at fault in an accident, that $5,000 has to cover any on-site damage or clean-up costs. This amount should also be potentially consumed for the rental, repair, or replacement of the other vehicle, as needed. The reality is that $5,000 is not enough for everything that was just described.
New Jersey has higher minimum limits for larger commercial vehicles. For commercial motor vehicles (CMVs), in between a typical sedan or truck and a semitruck, the minimum liability limit is $300,000. This applies specifically to those vehicles that are garaged in New Jersey and weigh between 10,001 and less than 26,001 pounds.
While the federal government has regulations on minimum coverage for semitrucks, in 2024, the New Jersey governor signed into law its own requirements for semitrucks. CMVs must now carry at least $1.5 million in liability to operate in the state.
General liability is the most common type of business liability insurance because of its broad range of coverage. It has three primary areas of coverage:
However, most insurance companies in New Jersey will include other coverages like medical payments, premise liability, and product liability insurance in their general liability policy. Endorsements can expand general liability coverage, too.
While commercial auto insurance and workers’ comp are the only state-wide required coverages in New Jersey, there are some other industry-specific requirements, which include the following:
The above examples illustrate this: many industries require insurance, and a number of local municipalities do, too. So make sure to check with your industry licensing boards and local municipal governments to see the New Jersey business insurance requirements you may need to meet.
If you read that a certification board requires a certificate of general liability, proof of insurance, or certificate of insurance (COI), know that these are all the same name for a document showing your active policy with limits.
While there are required coverages in NJ, like workers’ comp, because of the state’s laws and economy, there are a few other coverages that small business owners should consider.
This insurance, regularly abbreviated EPLI, offers businesses protection against allegations of discrimination, including in the hiring and firing elements of employment. New Jersey’s law against discrimination (LAD) is a civil law prohibiting discrimination in NJ. In many ways, it is broader than the current federal law.
For example, federal law protects people ages 40 years and older from age discrimination. In NJ, the age discrimination begins at age 18. Also, in NJ, LAD is applicable to a business with only one employee, while the federal law doesn’t come into effect until your business has 15 employees.
When you think of New Jersey, one of the first things that probably comes to mind is the Jersey Shore. Currently, there are over 1,000 properties on the Jersey Shore just on Airbnb. If you own a rental property there or just rent your home out as part of the sharing economy, you will need vacation rental insurance. This is a type of commercial property insurance that will also give you liability protection in case a guest gets hurt.
Beyond the required coverages, your business still has certain risk exposures that you will want to make sure you have coverage for to protect your business. In 2020 alone, the average cost of a jury award for medical malpractice—a type of professional liability—was $1.8 million. The industry with the most small businesses in New Jersey is the service industry, meaning professional liability will be important for them.
Type of Coverage What It Is Professional LiabilityCovers claims of financial harm or loss as a result of advice or failure to perform a contracted service made by a third party
Commercial Property Is first-party coverage for property owned, typically fixed property, or contents Business Owner’s Policy (BOP) Is a combination of general liability, commercial property, and usually business lost income Inland Marine Is first-party coverage for tools and equipment Commercial Umbrella Is excess liability coverage that provides additional limits Cyber LiabilityIs first- and third-party coverage for losses related to data breaches, hacking, or other cyber-related losses
Professional LiabilityProfessional liability is very important coverage for New Jersey since there are so many businesses in the service industry. Professional liability insurance is a narrower type of liability that brings protection to your business for negligence related to giving advice or adhering to a contract. This is why it is also called errors and omissions insurance.
Commercial PropertySo far, all of the types of insurance discussed are liabilities. There are first-party coverages, and for businesses, the most common and important type is commercial property insurance. This insurance is almost always limited to a fixed location on the policy. Commercial property insurance can cover the following:
When considering the cost of commercial property insurance, remember that commercial property comes with a deductible.
Business Owner’s Policy (BOP)A convenient and affordable option for small business owners is a business owner’s policy or BOP. A BOP is a combination (bundle) of general liability, commercial property, and business loss income.
However, most insurance companies limit the size of the business that can purchase a BOP. Usually, only businesses with revenue under $5 million or fewer than 100 employees are eligible for a BOP. Thus, it is more suitable for a small business but not one that has over 100 employees.
Eliminate any confusion by checking out our BOP vs general liability insurance comparison. This guide differentiates the two insurance policies to help you determine what your business needs.
Inland MarineCommercial property is both a type of insurance and a general term for other types of property insurance. A more common one is inland marine insurance, which is important if you own tools or equipment. Some providers will provide blanket coverage for tools and equipment, and others will require you to list down or “schedule” each item on the policy with their corresponding values.
An advantage of inland marine insurance is that the coverage follows the equipment and is not limited to one location.
Commercial UmbrellaInsurance policies come with a limit. But what if you’re in a risky industry? Or what if you are bidding on a project in Trenton, NJ, and your current liability limit isn’t high enough? For scenarios like that, you’ll want an umbrella insurance policy. This is an excess liability policy; hence, you will not use it unless you exceed the limits of your regular policy.
Cyber LiabilityEcommerce is becoming a regular part of most businesses, even small businesses. If you sell anything online or use a cloud to store important information, including customer data, then you shouldn’t underestimate the importance of cyber liability insurance.
Cyber liability has both first- and third-party coverage:
Insurance is a contract. The insurer agrees to pay for certain losses, and you agree to pay your premium. How much the premium costs will vary because of several factors.
In our research for this guide, we obtained a variety of sample quotes from different brokers and carriers. All of the quotes were for companies with three or fewer employees and an annual revenue under $250,000.