Massachusetts Small Business Insurance Policy Information
Massachusetts Small Business Insurance. If you own a MA small business, this article will help you understand some the of most common policies available. Commercial insurance helps protect your business and potentially your personal assets from lawsuits and settlements that can reach into the millions.
Having high enough limits in your commercial liability coverage should be a cornerstone of any business plan in the Grand Canyon State State. Carrying adequate Massachusetts small business insurance to protect your business shouldn't be a question - it's a must if you want to make sure that you don't get put in a position where you have to lose your business or pay money out of pocket to cover expenses associated with a loss.
Learn about Massachusetts small business insurance requirements, costs and coverages including: Commercial General Liability, Commercial Property Insurance, MA Workers Compensation, Business Owner's Policy (BOP), Errors & Omissions (professional liability), MA Commercial Auto Insurance and more.
You can skip to the following types of Massachusetts small business commercial insurance using these links:
Massachusetts Small Business Insurance General Information:
- MA Business Insurance Requirements
- Small Business Insurance Costs
- Massachusetts Insurance Commissioner
Types Of Commercial Insurance:
- Business Auto
- Business Owners Policy
- Commercial Crime
- Commercial General Liability
- Commercial Property
- Commercial Umbrella
- Cyber Liability
- Directors And Officers Liability
- Employment Practices Liability Insurance
- Equipment Breakdown
- Professional Liability (E&O)
- Workers Compensation
Is Business Insurance Required In Massachusetts?
Massachusetts only requires one type of commercial insurance policy - and only under specific circumstances:
- Workers Compensation: Massachusetts requires you to have worker's compensation insurance if you hire even one employee on a regular basis. This includes part-time employees, family members, minors, and immigrant employees. It is not required for independent contractors, but employees in domestic service must be covered if they work at least 16 hours a week.
Any other policies and coverages are optional for the business to purchase. There is not one small business insurance policy that covers every risk. There are different commercial insurance policies that cover various accidents, damages and lawsuits that could financially devastate a small business without the right protection. Some of the most common risks businesses face are covered in these policies.
How Much Does Small Business Insurance Cost In Massachusetts?
Following is a list of the main factors that determine the costs of small business insurance in IA:
- Claims History - Similar to auto insurance, more claims can mean higher costs. If you have claims on your policy, your premium will typically increase.
- Deductibles - Like medical insurance, lower deductibles for Massachusetts small business insurance mean higher premiums. If you raise your deductibles (out-of-pocket costs), your premium will usually decrease.
- Employees - The more people working for your company typically translates into higher insurance costs.
- Experience - A business with more experience can often get lower premiums that newer businesses with less experience.
- Gross Sales - The more revenue you have, the higher your premium can be. So if your small business earns less than $30,000 annually, your premiums may be lower than a larger corporation that earns more than $2,000,000.
- Industry - If you own a white collar business like an accountant, your premiums can be lower than a roofing company, where the potential risks for bodily injury and property damage are higher.
- Location - Your zip code can have a significant impact on your premium. For example, if your business is located in Calistoga, your business insurance costs may be lower than a similar business located in Los Angeles or San Francisco.
- Policy Limits - When you buy a policy, you can decide how much coverage you want, and you typically will pay more for higher limits. For example, a general liability policy with a $1,000,000 limit per claim will cost more than one with a $300,000 limit.
Massachusetts Small Business Insurance Policies
Massachusetts small business insurance needs, costs and coverages are different for each industry and MA region. While not an exhaustive list, to properly protect your business against lawsuits - consider these additional policies that fall under commercial property and/or casualty insurance:
The person injured in an auto accident may be a young child, a wage earner, a surgeon, or a homeless person. The costs of the accident may be relatively small or run into the millions of dollars, depending on the victim and his or her injuries. Massachusetts commercial auto insurance helps protect your business if you hurt a person or damage their property.
What Is Covered - Massachusetts business auto insurance protects your assets in several ways:
- Covered auto liability coverage insures your legal obligations that arise from an accident, including lawsuits and their associated costs. The limits you purchase should be high enough to handle the potentially serious injuries and loss of earnings a victim may sustain.
- Uninsured and underinsured motorists coverages protect you when you are involved in an accident caused by a driver who has no insurance or insurance with relatively low limits. The limits you select for this coverage should be the same as your liability limits.
- Physical damage coverage on vehicles directly protects your assets. Comprehensive, Specific Causes of Loss and Collision are the coverage options available. Deductibles should be as high as you can comfortably absorb to maximize the protection provided relative to the premium cost.
- Medical payments coverage and towing expense costs for private passenger vehicles are other optional coverages to consider
To summarize, commercial auto is coverage for vehicles and their drivers owned by the business and/or used for business purposes, and covers these common claims:
- Physical damage
- Medical payments
- Uninsured motorists
Business Owners Policy (BOP)
Massachusetts small business insurance offers coverage for business property and casualty exposures. Wouldn't it be great if you could get most or all of them in just one policy? If you qualify, the Business Owners Policy (BOP) may be exactly what you're looking for. This single package covers your buildings and business personal property, as well as liability imposed on you because of your premises, operations and products. In addition, it has numerous coverage extensions and optional coverages available.Business Liability Coverage
Much like a general liability policy, the liability coverage offered by a BOP:
- Insures bodily injury and property damage liability and the legal obligations that arise from an occurrence. It also covers lawsuits and their associated costs. The limits of insurance selected should be high enough to handle serious claims. This coverage is subject to a number of exclusions.
- It also covers personal and advertising injury liability and related legal obligations arising from an offense as well as lawsuits and their related costs. The limits of insurance selected should be high enough to handle serious injuries and the injured party's loss of earnings. This coverage is also subject to a number of exclusions.
- Medical expenses coverage applies to medical expenses of individuals injured on your premises or due to your operations, without regard to fault.
Buildings can be more than just a single building. The structure listed and described that has a limit of insurance on the declarations is covered, along with the following:
- Additions under construction if not covered elsewhere
- Completed additions
- Indoor and outdoor fixtures
- Permanently installed machinery and equipment
- Personal property you own as a landlord in furnished apartments
- Personal property you own used to service or maintain the building or premises
Business personal property (BPP) is more than just the contents of a building. The following business personal property is covered when a limit of insurance appears on the declarations and when it is in the described building and within 100 feet of the premises or building while in the open or in or on a vehicle:
- Exterior building glass you must cover if you are a tenant
- Leased personal property you are contractually responsible to insure
- Personal property you own and use in the business
- Property of others in your care, custody, or control
- The use interest in any improvements and betterments you made or acquired if you are a tenant
To summarize, a Business Owners Policy (BOP) packages general liability and commercial property into one policy, and covers these common claims:
- Damaged Business property
- Customer injuries
- Business interruption
Commercial General Liability
You don't have any control over the ultimate cost of injuries to a person injured because of your operations, products, or services. The person injured may be a toddler, a contractor, an accountant, or a homemaker. The cost of the injuries may be comparatively minor or run into the millions of dollars, depending on the person and the extent of his or her injuries. This is why you need the right amount of Massachusetts small business insurance.
Commercial general liability insures the bodily injury liability, property damage, and personal and advertising injury liability exposures of a variety of commercial businesses, enterprises, and ventures.
What Is Covered - Massachusetts general liability insurance protects your assets in several ways:
- Liability coverage for bodily injury and property damage insures your legal obligations that arise from an accident. It also includes the costs related to lawsuits and other legal proceedings. The limits of insurance should be sufficient to handle serious injuries and the injured person's loss of earnings.
- Liability coverage for damages due to personal and advertising injury insures your legal obligations that arise from an offense. It also includes the costs related to lawsuits and other legal proceedings. The limits of insurance should be sufficient to handle serious injuries and the injured person's loss of earnings.
- Medical Payments coverage pays the cost of medical care to persons injured on your premises or due to your operations, regardless of fault.
Each of these Massachusetts small business insurance coverages is subject to certain policy exclusions, conditions, and definitions. Following a few examples of how a CGL policy can cover third-party bodily injuries, third-party property damage, and advertising injuries;
- A visitor slips and falls on a wet floor in your restaurant.
- A tree trimmer accidentally drops a tree on a customers home.
- A competitor sues your business over an ad that was published that disparages them, damaging its reputation.
To summarize, general liability is typically required for most commercial leases, and covers these common claims:
- Damaged customer property
- Libel or slander lawsuits
- Slip-and-fall accidents
The primary goal of any Massachusetts small business insurance program is to protect the insured's real and business personal property. Tangible property usually represents a significant portion of its total assets, regardless of the size of the business.
Protecting your real and personal property is an important element of your insurance program. No matter the size of your business, a large percentage of your assets and resources are tied directly to your property. A commercial property program can provide the coverage you need if a loss should occur.Covered Building
When there is a limit of insurance for building on the declarations, the building or structure listed and described is covered property. The following is also considered covered building property:
- Additions under construction, alterations, and repairs that other insurance does not cover. The materials, equipment, supplies, and temporary structures that are on or within 100 feet of the premises and used to make the additions, alterations, or repairs are also building.
- Completed additions
- Fixtures. This includes outdoor fixtures.
- Permanently installed machinery and equipment
- Personal property the insured owns and uses to service or maintain the building or premises
When there is a limit of insurance for personal property on the declarations, coverage applies to the following property if it is inside the building or structure at the designated premises. It is also covered if it is outside the building or structure but within 100 feet of the building or premises. Such personal property outside can be either in the open or in or on a vehicle.
- All other personal property the insured owns and uses for business
- Furniture and fixtures
- Labor, materials, or services the insured furnishes or arranges on personal property of others
- Leased personal property the insured has a contractual responsibility to insure
- Machinery and equipment
- The insured's interest in any improvements and betterments it made or acquired if the insured is a tenant
Personal property of others is covered when there is a limit of insurance on the declarations but only when:
- It is in the insured's care, custody, or control.
- It is either inside the building or structure at the listed and described premises or outside within100 feet of the building or premises in either the open or in or on a vehicle.
- The insurance company pays for loss or damage to personal property of others for only the account of that property's owner.
To summarize, commercial property insurance covers these common claim types:
- Theft or vandalism
- Water damage (non-flood)
- Wind damage
Workers Compensation & Employers Liability
Workers' compensation insurance provides certain benefits to employees injured during the course of their employment. The Industrial Commission of Massachusetts makes determinations about eligibility for workers' compensation benefits.
Under Massachusetts law, it is mandatory for employers to secure workers’ compensation insurance for their employees. Workers’ compensation is a "no fault" system in which an injured employee is entitled to receive benefits for an industrial injury, no matter who caused the job-related accident. If an illness or injury is job-related, then the injured worker (also known as a claimant or applicant) receives medical benefits and may receive temporary compensation, if eligibility requirements are met. In some cases, a claimant may also receive permanent compensation benefits, "job retraining," and supportive medical care.
There are times when the employed worker's injury is not compensable under workers compensation or occupational disease laws. In those cases, Employers Liability coverage responds to the injured worker's allegations of negligence on the employer's part, subject to its terms, conditions, limitations, and exclusions. The coverage the basic policy provides may be broadened, restricted, clarified, or made to comply with specific state regulatory requirements by using a variety of available endorsements.
To summarize, workers compensation is required if businesses has any employees, even one part-time (in most states), and covers these common claims:
- Employee medical expenses
- Lost wages
- Legal costs and fees
Professional Liability (Errors and Omissions)
Professional liability insurance, also known as errors and omissions (E&O), is a type of liability coverage that protects your company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes you made (errors) or because you didn't perform some service (omissions).
Professional liability can cover the legal costs of defending your company in a civil lawsuit and some damages if awarded, even if you haven't made a mistake. Eamp;O coverage is not included in a general liability insurance policy.
If your business:
- Provides a professional service
- Gives advice to clients
- Is contractually required to carry
you should probably purchase an errors and omissions policy. Common claims that E&O covers are negligence, misrepresentation, violation of good faith and inaccurate advice.
In the medical and legal professions, professional liability is called malpractice insurance.
To summarize, professional liability insurance helps protect professionals against liability incurred as a result of errors and omissions in performing their professional services, and covers these common claim types:
- Business disputes
- Professional negligence lawsuits
- Work errors, mistakes & oversights
Accidents are unpredictable. Some accidents are very small. Others trigger catastrophic events in the lives of the injured parties. Are your policy limits sufficient to protect you if a person you injure must have multiple lifesaving surgeries or requires around the clock care for the rest of her life? If not, your business capital could be required to make up the difference.
Commercial liability umbrella is a stand-alone coverage that contains its own coverage, exclusions, and conditions. It provides excess limits over General Liability, Automobile Liability, Employers Liability, and other underlying liability coverage forms or policies. In addition, and because it is a stand-alone coverage form, it may include coverage that underlying coverage forms or policies do not include or provide.
To summarize, commercial umbrella is excess liability coverage that 'extends' the limits of a general liability and/or other liability policies, and offers:
- Additional general liability limits
- Additional workers comp limits
- Additional commercial auto liability limits
The law in MA requires businesses to notify any Massachusetts residents when an unauthorized person accesses unencrypted personal information. Cyber liability insurance helps your business deal with the costs of data breach and recovery by helping to pay for:
- Security Breach Expense - Loss that is the direct result of a security breach.
- Extortion Threats - Loss that is the direct result of an extortion threat.
- Replacement or Restoration of Electronic Data - Loss to stored computer programs or electronic data within a computer system.
- Business Income and Extra Expense - Loss that is the result of an interruption is covered when it is a direct result of a cyber incident or extortion threat.
- Public Relations Expense - Loss that is the result of negative publicity is covered when it is a direct result of a cyber incident or security breach.
- Security Breach Liability - Loss that is the result of a claim which is discovered during the policy period is covered if the insured is legally obligated to pay it and was due to a wrongful act that takes places before the end of the policy period.
To summarize, cyber liability helps cover a business' liability for a data breach in which their customers' personal information is exposed or stolen by a hacker or criminal, and covers these common claims:
- Breach notification expenses
- Data breach lawsuits
- Fraud monitoring costs
Directors And Officers Liability
Corporate directors and officers (D&O) have a duty to manage the company in their stockholders' best interests. They are bound to use due care and to be diligent in respect of the management and administration of the corporation's affairs and in the use of its property and assets. Accordingly, they are liable for losses or injuries that are caused by their breach or neglect of duty.
Recognizing the need to have competent directors and officers on executive boards, many corporations have put in their by-laws or charters certain resolutions undertaking to indemnify their directors and officers for legal expenses incurred by them in defending suits based on alleged wrongful acts in their capacities as directors and officers. Such indemnification provisions are permitted by most states' laws. Protection varies from state to state. In general, state statutes do not protect directors from claims brought by governmental agencies, or claims alleging violations of securities and exchange laws or other federal laws.
To summarize, directors and officers is a type of liability insurance that covers individuals for claims made against them while serving on a board of directors and/or as an officer, and covers these common claims:
- Side A - Protects a corporation's directors and officers when the company cannot indemnify the individuals.
- Side B - Reimburses the organization when it indemnifies the individuals, thus protecting the company's balance sheet.
- Side C- Also known as "entity coverage," this eliminates disputes of coverage allocation when both the directors and officers and the insured organization are named as co-defendants in a securities lawsuit.
Commercial property coverage forms specifically exclude most types of equipment breakdowns while the Equipment Breakdown Protection Coverage Form Insures only equipment breakdown - which covers loss or damage to your covered property that results when covered equipment breaks down.
This coverage includes inspection service as a part of the basic coverage because you can eliminate most equipment breakdowns with proper maintenance. These inspections also satisfy any obligation you have to conduct required governmental or statutory inspections.Covered Equipment
Four types of equipment you may own or operate can be covered:
- Mechanical and Electrical Equipment
- Production Machinery
- Pressure or Vacuum Equipment
- Diagnostic Equipment
This Massachusetts small business insurance coverage also applies to your computer equipment, communications equipment, and equipment that generates, transmits, or uses energy.
To summarize, equipment breakdown is coverage for losses due to mechanical or electrical breakdown of nearly any type of equipment, and covers these common claims:
- Lost income
- Expenses incurred during the restoration period
- Spoiled inventory
- The cost to repair or replace damaged equipment, including labor.
Employment Practices Liability Insurance
The current level of workplace morale, the state of the economy, and legislation such as the Americans with Disabilities Act and the Family Medical Leave Act have all led to a marked increase in employment-related practices claims and lawsuits. Because these legislative and other legal changes have provided significant incentives for employees to file employment-related claims, employers such as you should be more aware of your susceptibility to such actions.
Employment-Related Practices Liability Coverage provides broad insurance protection from employment-related practices claims and lawsuits that are brought against your company, managers and directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline and termination and negligent decisions involving hiring, promotion, and compensation. It also applies to breach of employment contract, employment-related emotional distress, and mental anguish, invasion of privacy, libel, and slander.
Claims can come from both current and former employees and even from job applicants you didn't hire! The procedures that you use or don't use in hiring, firing and managing your employees can translate into huge defense costs and legal awards to plaintiffs for your errors or oversights even if they were unintentional.
Allegations are made by employees who claim to have suffered various types of financial loss or emotional injury because of their employers' acts (or failure to act). The list of allegations involves wrongful termination, demoting an employee without justification, failure to hire or promote a worthy employee, unwarranted discipline or abuse (particularly sexual harassment).
Many of these offenses are said to be the result of illegal discrimination on the basis of age, gender, religion, race, nationality, or sexual orientation. Other offenses are claimed to be a violation of the individual's civil rights, or the failure to accommodate a mental or physical limitation or disability.
Sexual harassment by the employer's management or supervisory staff, or by fellow employees, has grown to include allegations of same-sex harassment. In addition to injuries involving sexual abuse, physical, mental or emotional abuses are also being claimed with more frequency.
To summarize, Employment practices liability is coverage for claims made by workers that their legal rights as employees of the company have been violated, and covers these common claims:
- Sexual harassment
- Wrongful termination
- Breach of employment contract, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, wrongful infliction of emotional distress, mismanagement of employee benefit plans and others.
Most theft losses are comparatively small, fall under the deductible, are excluded, or are uninsured. However, larger ones can put a company out of business as quickly as an uninsured fire. Massachusetts small business insurance - specifically business personal property coverage forms and policies written on an All Risks or Special Causes of Loss basis usually cover theft of property and merchandise by outside parties.
However, they usually exclude losses due to employee dishonesty, theft of money and securities, computer fraud, safe burglary, extortion, and related criminal acts. This is why every MA business needs a sound program of crime coverages for employee theft and other types of criminal and fraudulent activities.
Types Of Coverage - The ISO Commercial Crime Coverage Form offer seven types of protection:
- Computer and Funds Transfer Fraud pays for loss or damage to money, securities, and other property fraudulently transferred using a computer from your premises or a financial institution's premises to an unauthorized person or premises. It also covers loss of funds as a direct result of fraudulent instruction to a financial institution telling it to transfer, pay, or deliver funds from your transfer account.
- Employee Theft covers loss or damage to money, securities, and other property that one or more of your employees causes.
- Forgery or Alteration covers loss caused when someone other than an employee forges or alters a negotiable instrument such as a check.
- Inside the Premises–Robbery or Safe Burglary of Other Property pays for loss or damage to property other than money and securities inside the premises. However, this is subject to the conditions that either you or an employee must be robbed or the safe burglarized.
- Inside the Premises–Theft of Money and Securities pays for theft, disappearance, and destruction of money and securities from inside your premises or a financial institution premises. However, it does not cover theft of merchandise or stock.
- Money Orders and Counterfeit Money pays for loss as a direct result of you or your employees accepting fraudulent money orders or counterfeit money in good faith and in exchange for merchandise, money, or services.
- Outside the Premises pays for loss of money or securities outside the premises, in the care of a messenger or armored car service, or as a direct result of theft, disappearance, or destruction. It also pays for loss or damage to property other than money and securities as a direct result of robbery outside the premises that is in the care of a messenger or armored car service.
To summarize, commercial crime insurance is coverage for any dishonest acts of your employees including damage to your property, fraud or theft of a customer's property, and covers these common claims:
- Employee dishonesty
- Forgery or alteration
- Money and securities
- Theft of client's property
Massachusetts Insurance Commissioner
You can visit https://www.mass.gov/orgs/division-of-insurance, or write to the Massachusetts Division of Insurance at:Massachusetts Division of Insurance
1000 Washington Street, Suite 810
Boston, MA 02118
You can also call (617) 521-7794.
The primary mission of the Division of Insurance (DOI) is to monitor the solvency of its licensees in order to promote a healthy, responsive and willing marketplace for consumers who purchase insurance products. Protection of consumer interests is of prime importance to the Division and is safeguarded by providing accurate and unbiased information so consumers may make informed decisions and by intervening on behalf of consumers who believe they have been victimized by unfair business practices.
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