Pennsylvania business insurance: What you need to know

Do I need business insurance in Pennsylvania?

Small businesses need certain coverage in Pennsylvania. Businesses that fail to meet Pennsylvania’s insurance requirements could be fined, lose their professional license, and damage their reputation.

Eric Goldberg, department vice president and counsel, commercial lines, at the American Property Casualty Insurance Association, an insurance industry trade association, says businesses that don’t follow the insurance laws in their state could face severe penalties.

“Businesses should work with their insurance agent or broker to make sure they are complying with all state laws and requirements with regards to commercial insurance coverage,” Goldberg says. “Failing to do so could result in severe financial penalties or even criminal prosecution in some states.

“While penalties and sanctions vary by state, they often include relatively sizable monetary penalties for failures to comply,” Goldberg says. “Most states may issue stop work orders on businesses that fail to secure workers' compensation insurance. In addition to the monetary fines and orders to suspend operations, employers are subject to criminal prosecution in many states.”

Types of Pennsylvania business insurance

Below are some of the most common types of small business insurance policies. Some are required by Pennsylvania laws, and others might be necessary to sign a lease or secure business contracts.

Even when not required by legal or contractual obligations, some of these policies just make good business sense because they protect your financial assets.

• General liability covers common business risks such as a customer accidentally slipping and falling at your property and employee damage to a customer’s property. It also covers product liability, copyright infringement and advertising injury.
• Commercial property insures against losses from things like fire, severe weather, vandalism and theft. Most commercial landlords require commercial property insurance in order to sign a lease.
• Workers’ compensation covers work-related injuries and illnesses for your employees, including medical bills and lost wages. Regular health insurance may not cover on-the-job injuries and illnesses.
• Commercial auto covers the cost of an accident if one of your employees was at fault for an accident while using one of your vehicles for business.
• Professional liability/medical malpractice covers the cost of lawsuits from clients who are unsatisfied with your work. This includes accusations of negligence, breach of contract, missed deadlines or a mistake that causes someone financial or bodily harm. Professional liability is also known as errors and omissions (E&O) coverage.

Pennsylvania business insurance requirements

Pennsylvania requires auto liability insurance for all business-owned vehicles. Most employers are required to carry workers’ comp and several professions are required to carry professional liability or medical malpractice coverage.

Outside of state law, it’s worth noting that certain types of insurance are required to bid on federal contracts. This includes workers’ comp, general liability and automobile liability.

Commercial auto insurance

Pennsylvania requires all business and personal vehicles to carry auto liability insurance with limits of at least:

• Bodily injury: $15,000 per person; $30,000 per accident.
• Property damage: $5,000 per accident.
• Medical benefits (personal injury protection): $5,000.

Semi-trucks and other large vehicles that have a serial number from the Pennsylvania Department of Transportation or the U.S. Department of Transportation must carry a minimum combined limit of $750,000 if they travel on the nation’s highways. You can verify federal coverage requirements by checking your USDOT number with the Federal Motor Carrier Safety Administration.

Workers’ comp insurance

Pennsylvania requires most employers to carry workers’ compensation insurance for their employees, including those who work part-time or perform seasonal work.

Some Pennsylvania businesses can seek an exemption if all of their employees are covered under other workers’ comp acts, such as railroad workers, longshoremen and federal employees. Domestic worker coverage is optional.

Professional liability/medical malpractice

Pennsylvania requires several professions to carry some version of professional liability, errors and omissions or medical malpractice coverage.

Pennsylvania requires those in the medical field including physicians, nurse practitioners and OB/GYNs, to have medical malpractice coverage of $1 million per occurrence and $3 million aggregate. The first $500,000 of this coverage is provided through Franklin Casualty. The next $500,000 is provided by the state Medical Care Availability and Reduction of Error Fund. Mcare is a special fund that ensures people injured due to medical malpractices are reasonably compensated.

Chiropractors must have coverage of $100,000 per occurrence and $300,000 aggregate.

Physical therapists must have $1 million of professional liability coverage, per occurrence.

Home inspectors must carry errors and omissions coverage of $100,000 per occurrence and $500,000 aggregate.

Lawyers are not required to carry professional liability coverage, but they must notify their clients in writing if they don’t have at least $100,000 of per-occurrence coverage and $300,000 aggregate.

How much is small business insurance in Pennsylvania?

The cost of business insurance depends on several factors such as your business location, the type of work you do, how many employees you have and the coverage levels you’re seeking.

According to Insureon, an insurance broker specializing in small business coverage, these are the average cost of common business insurance policies:

• General liability: $500 per year.
• Commercial auto: $1,762 per year.
• Business owner’s policy: $684 per year.
• Workers’ compensation: $542 per year.
• Commercial property: $800 per year.
• Professional liability/E&O: $735 per year.

Pennsylvania business insurance companies

There are many small business insurance companies offering policies in Pennsylvania, so you have several options. The following companies offer small business insurance in most states.

• The Hartford boasts that it has more than 200 years in the insurance business, with more than 30 years devoted to small businesses.
• Hiscox says it has more than 50,000 small business customers and bills itself as “America’s leading small business insurer.”
• Next Insurance specializes in small business insurance.
• Progressive is the number one commercial auto insurer in the country by market share.
• Travelers is the second-largest commercial auto insurance company by market share.

How to get business insurance in Pennsylvania

Finding the right small business insurance in Pennsylvania doesn’t have to be complicated. You have several options when it comes to getting coverage.

• Work with an independent agent: One of the most trusted ways to find coverage is through referrals. Ask fellow business owners, friends, or local business associations for recommendations. Independent agents can help you evaluate multiple policies from different carriers and tailor coverage to your specific needs.
• Search online for quotes: Many insurers offer robust online tools that let you compare coverage options, get expert advice, and receive free quotes in minutes. This can be a good starting point if you want to explore what’s available without committing to a policy.
• Use digital tools: Online companies like Insureon can connect you with multiple carriers and streamline the process of getting small business insurance.
• Contact insurers directly: If you don't want to work with an independent agent, you can call insurers to get quotes and purchase coverage.

How to save on small business insurance in Pennsylvania

There are many ways to save money on small business insurance in Pennsylvania.

You can start by comparing your coverage options from multiple providers, or through an online brokerage such as Insureon, which allows you to compare policies from multiple providers.

If you need both commercial general liability and commercial property insurance, you could bundle these policies into a business owner’s policy (BOP), which is usually less expensive than buying these policies separately.

You could also:

• Work with your insurance company to identify and reduce risks.
• Use a risk management plan to reduce your chance of a claim.
• See what changes you can make to your property. For example, installing a sprinkler system might reduce the cost of property insurance.
• Pay your premium annually, which might earn you a discount from your insurance company.

What our expert says

Q: What happens if a small business doesn’t follow state insurance laws?

Eric Goldberg Department vice president and counsel, commercial lines, at the American Property Casualty Insurance Association.

"Failing to do so could result in severe financial penalties or even criminal prosecution in some states."