According to the Small Business Administration (SBA), as of 2020, Washington is home to 630,819 small businesses that employ 1.4 million people. If you're one of the 630,819 Washington business owners, you may be wondering if you're doing everything you can to protect your business.
If you're concerned you don't have adequate insurance coverage, we want to help. In this article, we'll talk about Washington business insurance requirements. We'll also give you a general overview of additional business insurance policies you might want to consider.
What Insurance is Required in Washington?
The state of Washington only requires businesses that hire employees to carry workers' compensation insurance. All business-owned vehicles in Washington state must be insured under a commercial policy.
Workers' Compensation Insurance
Washington state law requires that all businesses with employees carry workers' compensation insurance. Washington is unique because you cannot get workers' compensation coverage through a private insurer. Instead, it must be purchased through the state insurance fund (or you can self-insure).
Why is workers' comp so important? If one of your employees gets hurt at work or becomes ill from something they're exposed to, this insurance steps in and saves you (and your employee) a lot of money. How? Workers' comp insurance will cover the employee's medical bills and lost wages until they're able to return to work.
Commercial Auto Insurance
Commercial auto insurance covers accidents that happen while you're working. What if you have a personal auto policy? An accident that happened while your car was being used for business purposes might be excluded from coverage.
Commercial auto insurance can include coverage for third-party bodily injury, third-party property damage, personal injury protection, comprehensive and collision coverage, and uninsured and underinsured motorist coverage.
If you opt to get commercial insurance, you must carry a minimum of $50,000 of bodily liability coverage to pay for claims if someone is injured in an accident. The policy must also include $10,000 in coverage for physical damage coverage.
Types of Washington Business Insurance
We recommend small business owners in Washington consider these additional commercial insurance coverages, starting with general liability insurance.
Washington General Liability Insurance
General liability insurance (business liability insurance, commercial liability insurance, etc.) isn't required for Washington businesses but we recommend it for all business owners. Commercial general liability insurance is wonderful coverage because of how comprehensive it is compared to its cost. Washington liability insurance usually covers:
- Third-party bodily injury: This part of your general liability policy will pay for a customer's medical expenses if they get injured.
- Third-party property damage: If someone's personal property gets damaged or destroyed on your property, your insurance company will cover the cost to repair or replace the damaged item.
- Personal and advertising injury: This part of your business liability insurance will protect you if you're accused of libel, slander, or copyright infringement.
Commercial Property Insurance
Commercial property insurance (or business property insurance) is often required by lenders or leaseholders to protect your physical location. Property insurance protects your building from perils like vandalism, theft, fire, and acts of God (storm damage). This policy also protects the contents of your building (furniture, inventory, equipment, personal property).
Unfortunately, most insurance companies exclude any damage caused by flooding. If your business is located in a flood zone you may want to consider a separate insurance policy. If you don't, and you experience flooding, any costs to repair damage or replace inventory falls squarely on your shoulders.
Business Owners’ Policy
A business owners' policy (BOP) is a bundle of insurance coverages that insurance carriers will offer to small businesses at a rate that is often cheaper than purchasing each insurance separately. A standard BOP combines property insurance, general liability insurance, and business interruption insurance. Some specialized insurance companies may include other options in a business owner's policy that covers the risks that are unique to your industry. It's a great way to get customized coverage for the specific risks that your business faces.
Business Interruption Insurance
Business interruption insurance is usually included in a BOP. How does it work? If your property is damaged by a fire (or other peril covered by your insurance company) and you can't operate, this policy helps protect you from financial loss. It can cover payroll for your employees, paying your lease, and can also reimburse your lost income.
Professional Liability Insurance
Professional liability insurance—i.e. errors and omissions insurance—protects your business if you're accused of negligence, missing deadlines, incomplete work, professional errors, libel or slander (similar to a general liability policy).
Professional liability coverage will pay legal costs that may arise if a disgruntled client decides to sue you. A professional liability policy is usually recommended for anyone that offers professional services (like architects, healthcare professionals, or lawyers).
Cyber Liability Insurance
Cyber liability insurance—also referred to as data breach insurance or shortened to cyber insurance—protects your business from monetary losses if you're the subject of a cyberattack. If any customer data is compromised in the breach, your insurance company will pay to notify impacted customers. Most policies will also pay for credit monitoring for those impacted. Some will help cover the cost to repair your reputation if necessary. If any legal claims arise, they can help foot the bill for your defense.
How Much Does Washington Business Insurance Cost?
The cost of general liability insurance coverage for small businesses in Washington can start as low as $29 a month. But some factors can impact premium costs:
- The industry your business is in (and if it's considered high-risk)
- Where your business is located (higher crime areas may raise premium costs)
- The length of time you've been in business
- Your annual gross sales are factored
- Whether or not you have an extensive claims history
- The deductibles and policy limits you choose can raise/lower premiums
- How much coverage your business needs ($500,000, $1 million, etc.)
- The number of employees you hire will dictate workers' compensation costs
- The insurance company that you get coverage through
These are just a few of the things an insurance agent will consider when assessing your business insurance needs.
Get a Free Quote for Washington Small Business Insurance
We understand how difficult it can be to find the best commercial insurance for your Washington business. Whether you are a contractor in Alexandria, a heating and air conditioning specialist in Richmond, or an electrician in Washington Beach, we can help you find the perfect coverage for your specific needs.
Our goal at Tivly is to help you get the right insurance coverage at an affordable price. The process is fast and easy! Complete the form at the top of the page and someone will reach out to you. Or, give us a call at 877-907-5267.
Washington Small Businesses Commonly Insured
Some professions that are commonly insured in Washington include: