New York Business Insurance and Workers’ Comp Requirements

Who Needs Business Insurance in New York?

• All Employers with Employees: Any business with at least one employee (full-time or part-time, including temporary, leased, or seasonal workers) must carry workers’ compensation insurance.

• Businesses with Company Vehicles: Any business that owns, leases, or operates vehicles for work must have commercial auto insurance that meets state minimums.

• Professional Service Providers: Professions such as consultants, architects, engineers, healthcare providers, and IT professionals often need professional liability insurance, especially if required by licensing boards or client contracts.

• Contractors and Certain Trades: Contractors, home inspectors, and those seeking permits often must show proof of general liability insurance to obtain licenses or permits.

• All Other Businesses: While not every insurance type is mandated for all businesses, general liability and property insurance are strongly recommended for all New York businesses to protect against lawsuits, property damage, and other risks.

Workers’ Comp: When It’s Required

• Mandatory for All with Employees: New York requires virtually all businesses with one or more employees to carry workers’ compensation insurance, regardless of business size or industry.

• Exemptions: Sole proprietors with no employees and certain family members may be exempt, but most businesses must comply from the first day an employee is hired.

• Coverage: Workers’ comp covers medical care, wage replacement, disability, and death benefits for work-related injuries or illnesses.

• 2025 Updates: New York expanded mental health coverage for workplace-related stress and introduced paid prenatal leave requirements.

• Penalties: Fines start at $2,000 per 10-day period without coverage, plus additional liability for claims.

Commercial Auto Insurance Basics

• Required for Business-Owned Vehicles: All business vehicles must carry commercial auto insurance. Coverage is required for any vehicle owned or used for business purposes, including LLCs and corporations.

• Minimum Liability Coverage:

  • $25,000 bodily injury per person

  • $50,000 bodily injury per accident

  • $10,000 property damage per accident

  • $50,000 Personal Injury Protection (PIP) per person

  • Uninsured/Underinsured Motorist coverage: $25,000 per person, $50,000 per accident

• No-Fault State: New York’s no-fault system means PIP pays for medical expenses regardless of fault.

• Penalties: Driving without proper insurance can result in fines, license suspension, and business liability.

Professional Liability for Certain Jobs

• Who Needs It: Any business or individual providing professional services or advice-consultants, engineers, architects, healthcare providers, IT professionals, and more.

• Legal Requirements: Not required by state law for most professions, but often mandated by professional associations, hospitals, or client contracts.

• Coverage: Protects against claims of negligence, errors, omissions, and failure to deliver professional services, including legal defense costs.

• Home Inspectors: Must carry general liability insurance; E&O is not required but recommended.

Is General Liability Insurance Mandatory?

• State Law: General liability insurance is not universally required by New York law for all businesses, but is mandatory for certain trades, contractors, and those seeking permits.

• When It’s Needed:

  • Leases: Required by most commercial landlords.

  • Contracts & Permits: Frequently required for construction, utility, and other permits.

  • Home Inspectors: Must carry at least $150,000 per occurrence and $500,000 aggregate9.

  • Construction: General contractors typically need $1 million per occurrence and $2 million aggregate.

• Why Carry It: Covers third-party bodily injury, property damage, and advertising injury claims. Strongly recommended for all businesses to protect against lawsuits and accidents.

Other Useful Coverages for Businesses

• Business Owner’s Policy (BOP): Bundles general liability and commercial property insurance for cost-effective, broad protection.

• Commercial Property Insurance: Covers physical assets such as buildings, inventory, equipment, and furniture.

• Cyber Liability Insurance: Protects against data breaches and cyberattacks-important for businesses handling sensitive data.

• Employment Practices Liability Insurance (EPLI): Covers claims related to wrongful termination, discrimination, and harassment.

• Umbrella/Excess Liability Insurance: Provides additional coverage limits above standard liability policies.

• Business Interruption Insurance: Covers lost income and expenses if a disaster temporarily shuts down operations.

• Hired and Non-Owned Auto Insurance (HNOA): Covers vehicles not owned by the business but used for business purposes.