If you own a small business in the Keystone State, this information will help you understand Pennsylvania 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 Philadelphia, Pittsburgh, Allentown, Erie, Reading, Harrisburg or Scranton, having sufficient general liability insurance is an important part of any small business plan in the Commonwealth of Pennsylvania.
A small business is defined as any company with fewer than 500 employees. Small business is vital to Pennsylvania’s economic well-being, accounting for more than 98% of all state employers. Of Pennsylvania’s 994,745 small businesses in 2008 (the latest data available), 233,072 were small employers, accounting for more than 49% of the state’s private-sector jobs. Another 761,673 were one-person operations with no employees.
Source: SBA Pennsylvania Small Business Profile 2010.
About Commercial Liability Insurance for PA Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Pennsylvania 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.
Pennsylvania Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Pennsylvania. However, it is important to note that Pennsylvania is consistently identified as one of the worst legal climates in the U.S., and is ranked 46th by the Pacific Research Institute. It is one of only 5 states with a constitutional ban on the legislature to limit non-economic damages in liability suits. Six of every 10 businesses feel they would be able to increase revenues if they were assured they were protected from frivolous lawsuits. The state legislature is currently pursuing reform to address lawsuit abuse. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your Pennsylvania business to limit your risk exposure.
How Much Pennsylvania Commercial Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Pennsylvania business you operate or products you manufacture should determine how much Pennsylvania 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?
Pennsylvania 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
Pennsylvania requires that anyone who employs one or more persons, whether full or part time, carry workers compensation insurance. Sole proprietors with no employees are not required to carry workers compensation. Generally, executive officers and domestic workers are exempted, but to be certain of your responsibilities, contact the Bureau of Workers’ Compensation Employer Services Helpline at (717) 772-3702.
Pennsylvania 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
Employee Disability Insurance
E&O – Errors & Omissions
EPLI – Employment Practices Liability Insurance
Commercial Property Insurance
Regulating Agency and References
Pennsylvania Insurance Department
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage.
Pennsylvania 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 maintains District Offices in Philadelphia and Pittsburgh. Get the link to the Pennsylvania 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