Are you starting a business in New Jersey? Trying to make sense of all the types of insurance, let alone the requirements that may apply to you?

Fortunately, we have a few answers for you. Liability for issues such as bodily injury and product damage can be a major concern in New Jersey. So we’ve put together this brief guide on the types of business insurance you may want to consider.

We’ve also dug into New Jersey regulations to see which types of insurance you’re typically required to have. The result should give you a better sense of New Jersey business insurance.

Even better, we can help clarify the next steps.

New Jersey Business Insurance: The Basics

General Liability Insurance in New Jersey

Before we detail the ins and outs of business insurance needs in New Jersey, let’s start with some key definitions.

General liability insurance protects businesses from unexpected third-party damages, such as physical injury. It usually kicks in when there are claims made against your business for issues such as:

• Bodily injury to others
• Physical damage
• Harm to a business’s reputation
• Third-party accidents
• Property damage

In the event of a disastrous accident that causes injury to a third party, or damage to property you don’t own, your general liability insurance could potentially help cover your risks.

Which types of businesses need to sign up for general liability insurance in New Jersey? More importantly, why do they need it?

Your first guideline is to examine the situations that general liability insurance may cover. If bodily injury and physical damage are significant risks in your line of work, at a minimum, you may need general liability insurance.

Let’s look at a few examples where this type of insurance might kick in:

• “Wet floor” cases. If you own a gas station and one of your clerks mops the floor without leaving a “wet floor” warning sign, you run some serious risks. If a customer comes in and slips and injures themselves, they can potentially sue you for their injuries. General liability insurance can help offset these risks (up to your policy limits).
• Property damage. Let’s say you rent an office for your business. While rearranging the office furniture one day, a sofa accidentally goes through the window and causes thousands of dollars in damage.

The owner of the office building could be on the hook for that damage, which may lead to a lawsuit. Your liability insurance could help to cover the cost of repairs and legal fees up to your policy limits.

• Product liability. The world-famous “burned by coffee at the McDonald’s drive-through” example demonstrates why some companies look into getting business liability insurance. When the product itself caused damage (in that case, the coffee that was too hot and burned a customer as a result), McDonald’s was held responsible for the associated medical costs.

General liability insurance can potentially help with the cost of medical bills.

General liability insurance in New Jersey is not always required. According to the state, the requirement for businesses (aside from sole proprietorships and single-member LLCs) is to have workers compensation insurance.

However, business owners shouldn’t necessarily take this as a recommendation for not getting the insurance. The state strongly urges that businesses have general liability insurance.

Professional Liability Insurance in New Jersey

Swapping out just one word (”professional” for “general”) may not sound like a lot. But in business terms, professional liability insurance in New Jersey can cover completely different cases from general liability.

With general liability, a business owner looks to cover the risks of accidents associated with the running of and operations of the business.

But with professional liability insurance in New Jersey, you’re typically seeking coverage for potential damages that come as a direct result of the business and services you deliver.

For example, let’s say a graphic designer unwittingly infringed upon a copyrighted work when creating a logo for a business. Professional liability insurance may help the graphic designer get the protection they need from damages associated with such a case.

Generally speaking, you’ll want this type of insurance if your business can strongly affect the lives of your clients and customers. That usually includes:

• Accounting/bookkeeping
• Photography
• Graphic design
• Project management
• Branding and marketing
• Business consultation
• Real estate agencies

This is by no means a comprehensive list. But if you find yourself in a service-oriented field like any of the above, it’s a sure sign you should consider professional liability insurance.

And what about your state’s policy? Do you have to have it in New Jersey?

It is typically not required by the state of New Jersey, although the state does recommend that businesses get the most relevant insurance for their type of business.

What does this mean for you? A good rule of thumb: if you work in a type of business where you provide advice to clients, it’s a great way to give yourself some peace of mind.

New Jersey Workers Compensation Insurance

When an employee is sick or becomes injured while working for you, workers compensation insurance can help them weather the storm.

Workers compensation can help employees with:

• Lost wages as a result of not working
• Medical payments
• Expenses incurred during rehabilitation
• Death benefits

For this reason, workers compensation is also sometimes known as “employee liability insurance.”

If you operate in New Jersey, you have to have it. According to the state of New Jersey, “If you have employees you are required to provide workers’ compensation and employer liability.”

We know. The equivocation between “workers compensation” and “employer liability” can get a bit confusing. Keep in mind that they’re often used interchangeably for the same type of insurance in NJ.

Because this type of insurance is a requirement if you have employees, it helps to know the benefits of maintaining good workers compensation insurance. It not only serves as a benefit to your workers, but can help protect them from the risks associated with on-the-job issues.

Other Types of Business Insurance in New Jersey

Let’s say that you purchased general liability insurance for your Jersey-based business. You have a better idea of what it will cover now. But what won’t it cover?

You can still be exposed to risks – some of those being due to:

• Commercial vehicle accidents
• Punitive damages due to lawsuits
• Professional mistakes made in the course of business

In some cases, another type of insurance (such as professional liability insurance) can help take up the slack. This liability insurance can help protect against the mistakes you make in the course of performing business with a client.

But what about other areas? The state of New Jersey recommends that you also consider the following:

• Fire Insurance: Especially relevant for any business where the risks of fire and potential damage that could result are typically higher than the norm, such as a restaurant.
• Automobile liability: Important for any business that requires you to travel frequently, as the risks associated with automobile liability in the case of an accident can be high.
• Automobile physical damage: Similar to automobile liability insurance, the physical damage caused by an accident during work travel can be astronomical.
• Automobile collision: Collision insurance can help pay for the replacement or repairs of a vehicle, which is important for business owners who need to travel for their work.

New Jersey Workers Compensation: What You Need to Know

If you don’t have an employee (i.e., you’re a sole proprietor or a Single Member LLC) in New Jersey, you’re usually not required to have workers compensation insurance.

However, for every other business, New Jersey workers compensation insurance is a prerequisite. The regulations on the books typically requires that you have it.

How important is workers compensation to how things are done in New Jersey? For example, even offering health insurance and life insurance benefits to employees are both optional in NJ. However, workers compensation isn’t.

You should also know some of the rules that apply here, such as:

• Work-related injuries. Workers compensation is not a catch-all for all employee needs. In New Jersey, a worker needs to be able to demonstrate that a certain condition or injury resulted during the course of their employment.
• Employer liability. Workers compensation works by state law determining who is at fault if there is a specific work-related injury. Because businesses are typically responsible when a worker gets hurt on the job, it’s important that they have proper coverage. In New Jersey, it’s required.
• What the employer has to pay. According to the New Jersey Treasury, the employer can potentially be on the hook for compensation benefits. That’s why it’s so vital that businesses get workers compensation insurance. In short, because of the regulatory requirements in New Jersey when it comes to workplace injuries and the liability of the company, it makes sense that maintaining this type of insurance is a state requirement for certain businesses.

How Much Does New Jersey Business Insurance Cost?

Unfortunately, there’s no single answer to this. Your New Jersey business insurance rates will differ depending on your type of business, specific location, your insurance coverage needs, and the individual options you select.

You also may select to get additional coverage beyond general liability insurance and workers compensation. Although workers compensation insurance is the minimum required in New Jersey (if you have employees), it’s not the minimum typically recommended.

How do you proceed from here if you have no idea how much to budget?

However, because each situation is different, we recommend getting a personalized quote. You can check out our free business insurance quote tool and enter your specific trade to get an idea of what your monthly payments and coverage options might look like.

How Do I Get New Jersey Business Insurance?

It’s all a bit much, isn’t it? Doesn’t feel like something you can get done in one day?

We think it helps to break it down into its most basic steps. If you’re a New Jersey business, here are some ways you can get started today:

• Review the list of business insurance needs. As you do, check off any insurance need that seems applicable to your situation. Remember: if you’re in New Jersey with employees, workers compensation insurance is required.
• Shop around. Talk to other business owners — especially those who might serve the same industry. Ask them what coverage they recommend that you may be able to consider.
• Ask for help. It’s a new world if you’ve just started your own business! Don’t be afraid to ask for help. Insurance agents at Simply Business are happy to fill in the blanks. To give our New Jersey agents a call, dial us up at 855-762-0850.
• Examine your monthly budget. You have to budget for your business, just as you would for a family budget. You need to buy the insurance you need, but you also need to keep an eye on trimming expenses so they don’t get out of control.
• Decide between a monthly or annual policy. The upfront payment of an annual policy may cause sticker shock, but it can often be advantageous, depending on how you approach your budget.
• Download your Certificate of Insurance (COI) and keep it handy in your files. If you haven’t already, now’s the time to create a way to keep and organize all of your relevant business files.

Making Sense of New Jersey Business Insurance

Breaking things down this way is a great way to get started. You don’t have to conquer the world all at once. But you should try to take at least one step in the right direction every day.

Want to know more about getting your business started off on the right foot? Check out our section on Starting a Business on our blog Simply U, cross-reference it with these New Jersey-specific rules, and you’ll be confident that you’re well on your way.

This content is intended to be used for informational purposes only. It is not intended to provide legal, tax, accounting, investment, or any other form of professional advice.