If you operate a business in New Jersey, you know you have many responsibilities. One of the most essential is ensuring your company complies with insurance regulations. Having adequate insurance coverage is crucial for protecting your business financially.
If you don’t have adequate insurance, one incident that is not covered can create a significant financial burden. Sadly, many New Jersey small businesses can’t bear that burden and are forced to close their doors.
This article addresses NJ business insurance, including descriptions of the policies companies typically carry, how the state oversees insurance compliance, and what happens if your company fails to meet its insurance requirements.
Essential Insurance for New Jersey Businesses
Companies face an array of business risks, from lawsuits to property damage and more. The insurance policies a New Jersey company is required to have (or should purchase regardless of legal mandates) depend on several factors, including the type of work it does, its assets, and others. However, every business owner should understand and consider these essential coverages:
Workers’ compensation insurance
Workers’ comp is typically required by law for any business with employees. It can help pay for medical costs, legal fees, and lost wages and provide a death benefit to the employee’s family if a worker is injured or dies on the job.
General liability insurance
This policy covers damages and legal costs related to injury claims from non-employees (customers, for example), medical expenses associated with these incidents, and damage to others’ property in your possession.
Business owners policy (BOP)
Also called a property & liability policy, a BOP conveniently combines general liability provisions and company property coverage. It can protect the building you own or the space you lease while covering other property you own, lease, or have in your care, custody, or control. In addition, it can cover business interruption, lost income resulting from property damage, and costs you incur to resume business operations after suffering property damage, such as using a temporary location.
Errors and omissions (E&O) insurance
Any company providing professional advice or services should have this type of policy. Also known as professional liability insurance, it can cover the cost of damages and legal fees if someone claims your professional service caused financial harm to them or their business.
Commercial auto insurance
This type of policy covers vehicles your company owns or leases. It covers liability from accidents caused by people driving those vehicles and damage to the covered vehicle.
Cyber insurance
Often purchased as an add-on to another business insurance policy, this coverage can pay costs related to incidents where a hacker has stolen sensitive information and used it to commit fraud or is likely to. The policy can pay for expenses related to the breach, like notifying customers and providing credit monitoring.
Umbrella Insurance
Every liability insurance policy has limits to the amount it will pay for a covered incident. A commercial umbrella policy can kick in when a claim exceeds the limit of another policy—up to the umbrella policy’s limit. It keeps you from having to pay the amount that your liability policy won’t cover.
How New Jersey Enforces Compliance With Insurance Regulations
The New Jersey Department of Banking and Insurance (DOBI) oversees the licensing of insurance companies, agents, and brokers operating in the state. It also monitors and enforces compliance with applicable insurance laws and regulations. Its goal is to ensure that companies and consumers are protected financially in the event of an incident.
Businesses that fail to comply with business insurance regulations face significant consequences, including:
- Legal action. Authorities can impose fines or penalties for violations of business insurance regulations. They may also file lawsuits to compel companies to comply.
- Civil liability. Businesses that elect not to be adequately insured are more vulnerable to lawsuits from their employees, customers or clients, business partners, and others. Legal defense costs, settlements, and judgments can be very costly, adversely affecting a company’s bottom line and financial stability.
- Business disruption. Issues related to insurance regulation non-compliance, such as suspension of business licenses and reputational damage, can disrupt a business, hindering its ability to generate revenue and capitalize on future business opportunities.
Buying Insurance Saves Money in the Long Run
Researching, shopping for, and securing insurance isn’t something most business owners look forward to. They also may not enjoy paying the initial purchase cost or annual premiums. However, failing to comply with New Jersey’s business insurance regulations can be much more expensive and time-consuming in the long run.
If you haven’t purchased business insurance ever or recently, you might be pleasantly surprised at how easy it is. A process that used to require several calls and meetings with an insurance agent or broker can now be handled online in minutes. From getting instant quotes on the policies you require to purchasing coverage and downloading Certificates of Insurance, it’s easier than ever to secure solid financial protection for your business and meet state mandates.
What’s more, businesses often can get a policy with hundreds of thousands of dollars in coverage for just hundreds of dollars annually. Consequently, there’s no reason to risk non-compliance with New Jersey insurance law. It’s much better to get the coverage you want and are required to have and then turn your attention back to your business, knowing if the unexpected occurs, your company is protected from the financial repercussions.
