As a small business owner, you may already have insurance to protect your company from unexpected problems like property damage or losses from day-to-day operations. However, if your business grows and you need to hire employees, your insurance needs will change.

All small businesses with employees in New Jersey require some insurance for workers. Before you buy, however, it is critical to understand what your business needs and what the law requires.

Business insurance requirements

New Jersey has specific insurance requirements for different business structures. New Jersey’s Department of Labor and Workforce Development website provides guidelines on what the law requires for each type of business entity.

  • Corporations: All corporations must carry employment insurance for employees and officers.
  • Limited liability companies and partnerships: LLCs and partnerships must have insurance if the company has one or more employees other than the partners or members.
  • Sole proprietorships/single-member LLCs: Sole proprietors and single-member LLCs need insurance if the business employs anyone other than the principal owner.

Obtaining insurance

If your business needs employment insurance, you can get it in one of two ways. You can choose to have workers’ compensation insurance, with premiums based on considerations such as the work your employees perform and your payroll.

Alternatively, you can choose to provide insurance yourself. To do this, you must apply for and gain permission from New Jersey’s Commissioner of the Department of Banking and Insurance. Approval for self-insurance will depend primarily on your financial ability to meet any coverage obligations. Choosing self-insurance gives you more freedom to manage your own compensation claims and work with a third-party insurer of your choice.