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Is business insurance required by law?
Most states require businesses with employees to purchase workers’ compensation insurance. Sometimes other policies are required, as well.
State laws can mandate business insurance coverage
Most types of commercial insurance are not mandated by law. However, depending on the state laws where your business operates, you might be required to purchase:
- Workers’ compensation insurance for employees or high-risk contractors
- Commercial auto insurance for a business-owned vehicle
- Professional liability insurance for certain professional services
- Liquor liability insurance if you sell alcohol
Workers' compensation insurance
Almost every state requires businesses with employees to purchase workers’ compensation insurance. General contractors and other high-risk contractors who work alone may also need this coverage to obtain a license in their state.
For example, workers' comp is required in Georgia only when a business regularly employs three or more people. In most other states, every business with employees is required to carry workers’ comp, even for part-time employees.
Commercial auto insurance
You’re likely familiar with the insurance requirements for your personal vehicle. Similarly, every business-owned vehicle must be covered by commercial auto insurance.
Commercial auto insurance provides protection if an employee gets into an auto accident in a vehicle owned by your company. It can cover bodily injuries, property damage, and legal fees.
Another policy, hired and non-owned auto insurance (HNOA), provides liability coverage if you or your employees use personal, rented, or leased vehicles for business purposes.
Professional liability insurance
Some professionals need professional liability insurance to get licensed in their state. This policy provides protection if a client sues over business mistakes or oversights that caused financial loss. It's also called errors and omissions insurance (E&O) or malpractice insurance, depending on the industry.
Professions that may need this coverage to get licensed include real estate agents, insurance agents, doctors, and lawyers.
Liquor liability insurance
Businesses that sell alcohol are often required to have liquor liability insurance. This policy provides protection if your business is held responsible for injuries or property damage caused by an overserved patron.
Bars, restaurants, liquor stores, and any other business that sells or serves alcohol should carry liquor liability coverage. It's especially important in states with dram shop laws, which place the blame for any harm caused by intoxicated customers on the business.
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How do I get a certificate of insurance?
View video transcript.
Hey there! Yeah, up here in the corner. Good news: You've purchased your policy to protect your business! But that's only the beginning...
A licensed expert will email you a Certificate of Insurance the day you buy a policy. I'd do it, but, you know, I'm an animated talking head.
The certificate means peace of mind. And you can access it on the Insureon online customer portal where you can review policy info and all of your insurance documentation.
Need additional assistance? Or want to make changes? Yeah, no problem! Call toll free, or reach out to a dedicated account manager with questions about billing and claims.
We're with you now, and as you grow. Behind the scenes, but there when you need us. Insureon. Protection is peace of mind.
Many clients will require proof of insurance before they sign a contract with your business. But in order to obtain a certificate of insurance (COI), you must have an active insurance policy.
If you don't have coverage, you can complete Insureon's easy online insurance application to get quotes from top-rated carriers.
Choose the policy that best matches your needs, and an Insureon agent can help finalize your policy details. Once your policy is active, you can contact your Insureon agent or log in to your account with our Customer Portal to download or request a certificate.
Other situations that require business insurance
Even when it’s not required by law, business owners still need commercial insurance in a wide range of situations—and to protect against unexpected financial losses.
Acquiring insurance for your small business allows you to:
- Apply for licenses. Many licensing bodies consider an active insurance policy a requirement of becoming licensed.
- Sign a lease. Your landlord may require you to have general liability insurance or commercial property insurance.
- Attract clients. Clients may require you to have liability insurance, and it can help attract prospective clients as well.
- Buy commercial real estate or expensive equipment. Damaged property or equipment can be easily covered with adequate property insurance or equipment insurance.
Businesses with unique risks may benefit from other types of insurance. Our licensed agents can help you find the right coverage for your business needs.
Get quotes from trusted carriers with Insureon
Complete Insureon’s easy online application today to compare small business insurance quotes from top-rated U.S. carriers. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.
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Updated: June 5, 2026
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