Whether you own a café in Allentown or manage a roofing crew in Pittsburgh, small business insurance in Pennsylvania is a must. The state enforces strict requirements, and without proper protection, one accident, lawsuit, or cyberattack could shut your doors.
Here’s what business owners need to know about Pennsylvania’s insurance requirements in 2025.
Who Needs Coverage in Pennsylvania?
If you operate a business and have even one employee—even part-time or remote—you must carry certain types of insurance.
Required coverages include:
- Workers’ Compensation Insurance: Legally required for all employers with one or more employees, including family members.
- Commercial Auto Insurance: Any business-owned vehicle must be insured. Policies must include these minimum coverages:
- Liability: $15,000 per person / $30,000 per accident for injury, and $5,000 for property damage (15/30/5).
- Medical Benefits: A minimum of $5,000 for medical expenses.
- Uninsured/Underinsured Motorist (UM/UIM): Must be offered and can only be rejected in writing.
- Industry-Specific Requirements: Attorneys must disclose to clients in writing if they do not carry specified minimum levels of malpractice insurance.
Key Insurance Policies You Should Carry
- General Liability Insurance: Covers third-party injuries, property damage, and legal fees.
- Business Owner’s Policy (BOP): Combines general liability with commercial property insurance. It is ideal for retail shops, offices, and foodservice businesses.
- Professional Liability (E&O): Essential for service providers and consultants, this covers mistakes, missed deadlines, and client disputes.
- Workers’ Compensation Insurance: Required for any employer, this covers medical bills and lost wages for workplace injuries. The cost is not a flat fee; it is calculated as a rate per $100 of your payroll based on employee job classifications.
- Cyber Liability Insurance: Protects against hacks, ransomware, and stolen customer data.
For high-risk businesses, the State Workers’ Insurance Fund (SWIF) offers guaranteed workers’ comp coverage.
Real Claims and Risks Faced by PA Businesses
- Slip-and-Fall Injuries: A customer falls in your store—settlements can exceed $25,000.
- Flood Damage: Pennsylvania experiences significant flooding. Standard property policies exclude flood damage, requiring a separate policy for protection.
- Cyberattacks: Small businesses are prime targets. Ransomware demands in PA have been rising over 20% annually.
- Auto Accidents: Crashes involving company vehicles frequently result in injury claims that exceed the low state-minimum coverage limits.
Discover cost-saving strategies in our guide: Local Business Insurance Solutions to Save You Money.
What Business Insurance Costs in Pennsylvania
Rates vary based on your industry, number of employees, and location. While general liability can start at $42/month for a low-risk business, workers’ compensation costs vary widely. The rate per $100 of payroll can be as low as $0.25 for a clerical office but can exceed $10.00 for a high-risk trade like roofing. Businesses in Philadelphia typically pay higher premiums than those in rural areas.
Need help estimating your premium? Use our quick calculator to get started.
Understanding the Claims Process & Penalties
When something goes wrong, acting fast is crucial.
- For Workplace Injuries: You must file a First Report of Injury with the state within 7 days if the injury causes disability.
- For Other Claims: Report the incident to your insurer promptly and keep detailed documentation like receipts and police reports.
Consequences for non-compliance are severe:
- Operating without required workers’ comp is a misdemeanor, punishable by a fine of up to $2,500 and one year in jail.
- If the failure is intentional, it is a third-degree felony, punishable by a fine of up to $15,000 and seven years in jail.
Final Takeaway: Get the Right Protection
Small business insurance in Pennsylvania protects everything you’ve worked to build.
Here’s what to do next:
- Review Pennsylvania’s commercial insurance requirements for your industry.
- Carry workers’ comp, and a complete auto policy (Liability, Medical Benefits, UM/UIM).
- Call us at 855-718-7552 to speak with a licensed advisor.
Whether you’re a contractor, retailer, or consultant, the right coverage keeps your business safe and compliant.
