If you own a small business in the Garden State, this information will help you understand New Jersey Commercial Liability insurance and protect your business and your personal assets from legal claims and settlements that can spell financial ruin. Whether you work in Newark, Trenton, Camden, Paterson, Bayonne, or Elizabeth, having sufficient general liability insurance is an important part of any small business plan in New Jersey.
A small business is defined as any company with fewer than 500 employees. Of New Jersey’s 779,599 million small businesses in 2008 (the latest data available), 199,382 were small employers, accounting for more than 50% of the state’s private-sector jobs. Another 779,599 were one-person operations with no employees.
Source: SBA New Jersey Small Business Profile 2010.
About Commercial Liability Insurance for NJ Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your New Jersey business from financial loss resulting from claims of injury or damage cause to others by you or your employees. A policy typically covers:
Bodily Injury – physical damage to a person other than an employee at your place of business and injuries caused by you or an employee at a client’s home or work place.
Property Damage – damage caused by you or an employee to someone else’s property.
Personal Injury – libel, slander, copyright infringement, invasion of property or privacy, wrongful eviction, false arrest and similar acts that cause damage to a person’s reputation or rights.
Advertising Injury – losses caused by your advertising
Legal Defense and Judgments – costs to defend against real and frivolous suits and judgments up to the limit of your coverage. Note this generally does not include punitive damages for negligence or willful misconduct.
New Jersey Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in New Jersey. However, the state has a reputation for lawsuit abuse according to the New Jersey Lawsuit Reform Alliance website, which says the state continues to lose ground to other states whose business environments encourage entrepreneurship. The Monmouth University Polling Institute found that 70% of New Jersey’s small business owners agree that the state’s liability laws make it less attractive than other states for business and 64% said lawsuits are a problem for New Jersey’s overall business climate. Accidents and lawsuits (legitimate and frivolous) do happen in the Garden State. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your New Jersey business to limit your risk exposure.
How Much New Jersey Commercial Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of New Jersey business you operate or products you manufacture should determine how much New Jersey commercial general liability insurance you need. A good rule of thumb for most small businesses is between $500,000 and $1 million. However, if yours is a high-risk business such as the building trades or has a high volume of interaction with the public such as a restaurant or retail business, you should consider increasing your coverage. Note that if you operate out of your home, your homeowner’s or renter’s insurance has limited coverage for business liability and loss.
How Are Premium Costs Assessed?
New Jersey commercial liability insurance premiums are based on a number of factors including the types of service or products you provide, the number of people you employ, how long you’ve been in business, and your claims history. Coverage is typically capped at a specific dollar amount for your policy period
Other Insurance to Consider for Your New York Small Business
New Jersey requires that anyone who employs at least one person, whether full or part time, carry workers compensation insurance. Sole proprietors with no employees are not required to carry workers compensation. Note that New Jersey’s interpretation of the definition of employee is broad and liberal. If you are uncertain, check with the New Jersey Department of Labor and Workforce Development.
New Jersey mandates that employers provide employee disability coverage to provide disability income for employee off-the-job illness or injury for up to 26 weeks.
New Jersey requires that all drivers carry minimum automobile insurance. If you use your car or truck for business, it is recommended that you purchase a commercial vehicle policy.
BOP – Business Owner’s Package
E&O – Errors & Omissions
EPLI – Employment Practices Liability Insurance
Commercial Property Insurance
Regulating Agency and References
New Jersey Department of Banking and Insurance
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage.
New Jersey Small Business Administration
The SBA is an independent agency of the federal government created to aid, counsel, assist and protect the interests of small business concerns and maintain a New Jersey District Office in Newark. Get the link to the New Jersey SBA at http://www.sba.gov/.
National Association of Insurance Commissioners (NAIC)
This is an organization of insurance regulators from the 50 states, District of Columbia and the five U.S. territories. NAIC provides a forum for the development of uniform policies when appropriate. It also offers an online form for filing complaints, reporting suspected insurance fraud and downloading key financial information about insurance carriers at www.naic.org
Insurance Information Institute (III)
This organization’s mission is to improve public understanding of insurance – what it is and how it works. Visit III at www.iii.org/