Business insurance is essential for protecting your company from various risks. In North Carolina, small businesses make up 98% of the economy, employing 46% of the state’s workforce. As a business owner, it’s crucial to understand the different types of coverage that can safeguard your assets. Here’s a breakdown of the key types of business insurance available in North Carolina in 2024.
Types of Business Insurance for North Carolina Businesses
Liability Insurance
Every business faces risks, whether from property damage or injury claims. Liability insurance helps cover claims related to reputation damage, bodily injury, and property damage caused by your business. In North Carolina, it’s vital to consider this insurance, especially when a customer can file lawsuits. Liability coverage is included in a Business Owner’s Policy (BOP), which bundles liability and property insurance. This option saves money while providing broad protection.
Business Owner’s Policy (BOP)
This policy combines property and liability insurance into one convenient package. It covers damage from fire, vandalism, or other incidents. A BOP also includes business income insurance, which compensates for lost revenue when operations halt due to a covered loss. You can tailor this policy to meet your specific needs by adding coverage options like data breach insurance.
Example incidents covered by a BOP:
- Damage or theft of business inventory, furniture, or equipment.
- Lawsuits resulting from customer injuries or reputation damage claims.
A BOP suits businesses that:
- Have physical locations such as offices or stores.
- Hold inventory that can be stolen or damaged.
- Face risks of lawsuits due to customer injuries.
Commercial Flood Insurance
Flood damage can devastate a business. Even in areas with low flood risks, unexpected weather events can occur. Commercial flood insurance helps protect your business from flood-related damage to walls, furniture, inventory, and more. It’s especially useful if:
- Your business is in a region with heavy rainfall or fast-melting snow.
- Municipal drains in your area may clog, causing unexpected flooding.
Workers’ Compensation Insurance
North Carolina law requires businesses with three or more employees to have workers’ compensation insurance. It covers medical expenses, lost wages, and other benefits for employees injured on the job. The law also applies to businesses using radiation in their operations. Without this insurance, businesses risk significant fines, criminal charges, or even imprisonment.
Workers’ compensation can cover:
- Medical care for an employee who trips over office furniture and needs treatment.
- Ongoing physical therapy after an employee suffers a back injury lifting heavy items.
- Compensation for families when an employee suffers a fatal workplace injury.
Special Insurance Policies for North Carolina Businesses
In addition to basic coverage, consider these insurance types for specific needs:
Insurance Type |
What It Covers |
| Automobile Insurance | Protects company-owned vehicles in case of accidents, damage, or theft. |
| Fire and Extended Coverage | Covers fire-related damage and other specified risks like lightning, explosion, or vandalism. |
| Business Interruption | Provides income replacement when your business can’t operate due to property damage or other covered events. |
| General Liability | Offers protection from claims related to bodily injury, property damage, and personal injury. |
| Bonds | Protects your business from financial loss due to contract breaches, employee dishonesty, or failure to meet obligations. |
| Excess and Umbrella | Provides additional liability coverage when claims exceed the limits of your standard policy. |
| Flood and Earthquake | Covers property and equipment damage from natural disasters, not typically included in standard policies. |
| Inland Marine | Protects products, materials, and equipment while transported overland or temporarily stored by a third party. |
| Package Policies | Combines several types of coverage into one policy, offering convenience and potential cost savings. |
Why Consider a Business Owner’s Policy
A Business Owner’s Policy (BOP) is one of the most practical and cost-effective options for North Carolina businesses. It offers robust protection and can be customized for specific industries. Here’s why it’s beneficial:
- Comprehensive Protection: Covers major risks like property damage and liability claims.
- Saves Money: Bundles essential insurance policies into one, reducing premium costs.
- Customizable: Add-ons such as data breach insurance ensure your business is fully protected against modern threats.
Workers’ Compensation Requirements in North Carolina
Workers’ compensation insurance is mandatory for businesses with three or more employees, including corporations and partnerships. This policy covers medical care, lost wages, and other benefits for employees injured while performing their job duties. Failure to have this insurance can result in fines, criminal charges, or even imprisonment.
Important requirements:
- Mandatory for Radiation Work: Businesses using radiation must carry workers’ comp regardless of employee count.
- Liability for Subcontractors: If your subcontractor doesn’t have workers’ compensation insurance, you may be held liable for their employees’ work-related injuries.
Types of Business Insurance in North Carolina
Insurance Type |
Description |
Who Needs It? |
| Liability Insurance | Covers claims related to bodily injury, property damage, or reputation damage. | Businesses with customer interactions, high risk of lawsuits, or those providing services/products. |
| Business Owner’s Policy | Bundles property and liability coverage. Also includes business income insurance to cover lost revenue. | Small to mid-sized businesses that own property, hold inventory, or face potential lawsuits. |
| Commercial Auto Insurance | Covers vehicles used for business purposes in case of accidents, theft, or damage. | Businesses that use vehicles for deliveries, employee transportation, or client visits. |
| Commercial Flood Insurance | Protects against damage from flooding, covering walls, furniture, inventory, etc. | Businesses located in areas prone to floods or with significant risk of water damage. |
| Excess and Umbrella Insurance | Extends the coverage limits of standard liability policies for large claims. | Businesses are exposed to high liability risks or are facing potential lawsuits with significant financial impact. |
| Professional Liability Insurance | Covers claims of negligence, errors, or omissions in professional services. | Service-based businesses such as consulting, accounting, legal firms, or healthcare providers. |
| Inland Marine Insurance | Protects goods, equipment, or materials transported overland or temporarily stored off-site. | Businesses that transport goods or own portable equipment used in off-site locations. |
| Cyber Liability Insurance | Covers data breaches and cyberattacks, including customer data protection and legal costs. | Businesses that store sensitive customer data or conduct operations online. |
| Workers’ Compensation | Provides medical benefits and wage replacement for employees injured on the job. | Required for businesses with three or more employees. |
North Carolina Workers’ Compensation Insurance Requirements
Category |
Requirement |
Penalty for Non-Compliance |
| Number of Employees | Businesses with 3+ employees must carry workers’ compensation insurance. | Fines, criminal charges (misdemeanor or felony), and potential imprisonment. |
| Radiation Workers | Companies working with radiation must have coverage regardless of the number of employees. | Risk of significant penalties and legal issues. |
| Subcontractors | If subcontractors lack workers’ compensation, the hiring business is liable for injuries. | Financial responsibility for the subcontractor’s injured workers. |
| Employee Benefits | Medical care, lost wages, and compensation for permanent injury or death are provided through this coverage. | Financial and medical support to employees and their families. |
Business Insurance Based on Industry
Industry |
Recommended Insurance Types |
Reason for Coverage |
| Retail | Business Owner’s Policy, Liability Insurance, Workers’ Compensation | High risk of customer claims and property damage, especially in physical storefronts. |
| Construction | Workers’ Compensation, General Liability, Inland Marine Insurance, Equipment Breakdown | Risk of employee injuries, transportation of materials, and equipment failure. |
| Healthcare & Medical | Professional Liability, Cyber Liability, General Liability | Protection from malpractice lawsuits and sensitive data breaches. |
| Technology & IT | Cyber Liability, Professional Liability, Business Owner’s Policy | Safeguarding against data breaches, client lawsuits, and business interruption due to cyberattacks or technology failures. |
| Hospitality (Hotels/Restaurants) | Business Owner’s Policy, Liability Insurance, Workers’ Compensation, Commercial Auto Insurance | Protection against customer injuries, property damage, employee accidents, and vehicle use for deliveries or transportation. |
| Real Estate | Professional Liability, General Liability, Business Owner’s Policy | Protection from negligence claims, injury lawsuits, and potential property damage during operations. |
Conclusion
Business insurance is a must-have for companies in North Carolina, whether you’re a small startup or a well-established enterprise. Choosing the right policies will help protect your assets, employees, and financial future. Liability insurance, Business Owner’s Policies, and workers’ compensation insurance are key coverages that can shield your business from various risks.
Here’s a final piece of advice: Talk to a professional insurance agent to tailor the best package for your specific business needs. With the right protection in place, you can focus on growing your business without worrying about unexpected setbacks.
Frequently Asked Questions
Does North Carolina require business insurance?
No, business insurance isn’t mandatory, but workers’ compensation is required for businesses with 3 or more employees.
How much is business liability insurance in NC?
Business liability insurance in NC typically costs between $300 to $1,000 annually, depending on the business type and coverage limits.
What are the minimum insurance requirements for North Carolina?
North Carolina requires workers’ compensation for businesses with 3+ employees and commercial auto insurance for business-owned vehicles.
What is full coverage insurance in NC?
Full coverage usually includes liability, collision, and comprehensive coverage for business vehicles in NC.
Does my LLC need a business license in NC?
Yes, most LLCs need a business license, depending on the local government and industry.
Is North Carolina a business-friendly state?
Yes, North Carolina is considered business-friendly with favorable tax policies and a growing economy.
