Maryland and DC require workers comp from your first employee, Virginia from your third. Auto minimums differ in all three, and the cheapest coverage upgrades are the ones most owners skip. Here are the five mistakes we see most and how to fix them.
Related Resources
- Virginia Workers Comp Commission
- Maryland Workers Comp Commission
- Fairfax County
- Virginia DPOR Contractor Board
- Loudoun County’s data center growth
- Virginia home care and hospice organizations
- Insurance Journal’s summary of the report
- Risk & Insurance
- Alcohol license through ABCA
- Virginia Workers’ Compensation Commission’s employer guidance
- 49 CRF Part 387
- Va. Code 46.2-2027
Most business owners in Maryland, Virginia and DC need four policies: general liability, workers comp, commercial auto if a vehicle is used for work, and an umbrella once their contracts or fleet grow. The expensive mistakes rarely come from skipping one of those. They come from buying the wrong limits, assuming the rules in one jurisdiction match the other two, or trusting a state minimum that was written decades ago.
We write coverage on both sides of the Potomac every week, and the same five errors keep showing up on the policies customers bring us. Here they are in the order owners usually run into them, with the fix for each and a ranking by cost at the end.
Key takeaways
- Maryland and DC require workers comp from your first employee, full or part-time. Virginia requires it once you regularly employ more than two people, and it counts your subcontractors’ employees toward that number.
- Auto liability minimums differ in all three: 50/100/25 in Virginia, 30/60/15 in Maryland, and 25/50/10 in DC. None of them covers a serious crash.
- Moving general liability from $1 million/$2 million to $2 million/$4 million raised the average premium by about $1 a month for Insureon’s small business customers.
- Any interstate for-hire truck rated at 10,001 pounds or more must carry at least $750,000 in liability under federal rules, before any state requirement applies.
- Maryland ranked among the four states with the most jury verdicts of $10 million or more against companies in 2025, which is the strongest local argument for an umbrella policy.
What business insurance is legally required in Maryland, Virginia and DC?
Only two coverages are required by law for most businesses in the region: workers comp once you hit the headcount trigger, and auto liability on any registered vehicle. Everything else, including general liability, is required by contracts, landlords and licensing boards rather than by statute. Mistake one is assuming the headcount trigger is the same everywhere you work.
| Requirement | Maryland | Virginia | DC |
|---|---|---|---|
| Workers comp trigger | 1 or more employees, full or part-time | More than 2 employees regularly employed | 1 or more employees |
| Who counts | Full and part-time staff | Part-time, seasonal, temporary, family members and subcontractors’ employees | Full and part-time staff |
| Auto liability minimum | $30,000 / $60,000 / $15,000 | $50,000 / $100,000 / $25,000 | $25,000 / $50,000 / $10,000 |
The Virginia count is where contractors get caught. The Virginia Workers’ Compensation Commission says a contractor must add its subcontractors’ employees to its own when counting, and that applies even if the sub carries its own comp policy. A two-person crew that hires a three-person drywall sub is a five-employee business for this purpose. Virginia also offers no waiver or opt-out form for a business below the threshold, so there is nothing to file that proves you were exempt.
Maryland is stricter on the headcount and simpler on the rules. The Maryland Workers’ Compensation Commission FAQ puts it plainly: one employee, full or part-time, triggers the requirement. A Virginia company that sends a single employee to a Bethesda job site should confirm its policy lists Maryland before the first day of work, not after the first injury.
The fix: list every state your employees physically work in, then have your broker confirm each one appears on the policy’s information page. Out-of-state employers can usually add Virginia by endorsement rather than buying a second policy.
How much general liability insurance does a small business need?
For most small businesses, $1 million per occurrence and $2 million aggregate is the floor, and $2 million/$4 million is usually worth the small extra cost. Mistake two is treating the floor as the target because it’s what everyone else buys.
The numbers make the case better than we can. According to our cost data, small business customers with $1 million/$2 million limits pay about $45 a month on average, while those who chose $2 million/$4 million pay about $46. That’s roughly $12 a year for twice the protection. Pricing for a roofer in Prince William County will look very different from a consultant in Arlington, but the pattern holds: the second million of general liability is cheap because few claims reach it.
The reason to buy it anyway is contracts. Property managers, general contractors and government agencies in this region routinely write $2 million or higher limits into their insurance requirements, often with additional insured wording. If you bid on a job and your certificate shows $1 million, you either lose the bid or scramble to endorse the policy mid-week. Contractors working in Northern Virginia should also read the licensing steps from Fairfax County and the Virginia DPOR contractor board before quoting coverage, since license class and job size shape what your customers will ask to see.
The fix: pull the insurance clauses from your three largest contracts or bids, find the highest limit any of them asks for, and set your general liability there.
If you’d rather have someone read those contract clauses with you, call us at 703-674-0299 and we’ll tell you what limits you actually need, including when you don’t need more.
Does general liability cover mistakes in my work?
No. General liability covers bodily injury and property damage you cause to others; it does not cover a customer’s financial loss from your advice, design, code or service. Mistake three is assuming the one policy you have covers the one claim you’re most likely to face.
Professional liability, sometimes called errors and omissions, fills that gap. If you’re an IT firm that misconfigures a client’s network, an engineer whose drawing has an error, a consultant whose recommendation costs a client money, or a staffing firm that places the wrong person, the claim against you is about money, not injuries. General liability will deny it, and it should.
The businesses we see underinsured here most often are the subcontractors feeding the region’s largest projects. Loudoun County’s data center growth has pulled in electrical, commissioning, controls and IT firms that started as two-person shops, and the prime contractors they work for expect professional liability on the certificate. The same goes for Virginia home care and hospice organizations, where a care decision gone wrong is a professional claim, not a slip and fall.
Two details matter more than the limit. Most professional liability policies are claims-made, which means the policy in force when the claim is filed responds, not the one in force when you did the work. If you switch carriers, make sure the new policy keeps your retroactive date, or you’ve quietly erased coverage for every past project.
The fix: if customers pay you for expertise rather than labor alone, price a professional liability policy, and protect your retroactive date every time you renew or switch.
Are state minimum auto limits enough for a business vehicle?
No. State minimums are written to keep uninsured drivers off the road, not to protect a business that owns the vehicle. Mistake four is carrying the minimum on a work truck because the policy was cheaper.
Virginia raised its minimums to 50/100/25 for policies issued or renewed on or after January 1, 2025, the final step in a three-year increase. Maryland sits at 30/60/15 and DC at 25/50/10. A DC policy at the minimum pays $10,000 for property damage, which won’t replace most new pickups, let alone the box truck you rear-ended. When a crash exceeds your limits, the injured party’s lawyer looks at the name on the door, and that name is your company.
For most service businesses we’d put $1 million combined single limit as the starting point on commercial auto, and higher if you run several vehicles or carry crews. Commercial auto is the priciest common line for small businesses, so this is where owners are tempted to cut, and it’s the worst place to do it.
Some operators don’t get to choose, because the rules set the floor for them:
| Operation | Who sets the requirement | Where to check |
|---|---|---|
| Interstate for-hire trucks, 10,001 lbs or more, general freight | Federal: at least $750,000 liability | 49 CFR Part 387 |
| Oil and most hazardous materials, 10,001 lbs or more | Federal: at least $1,000,000 | 49 CFR Part 387 |
| Virginia taxicab operators | Insurance must be filed with the DMV; localities may set higher minimums | Va. Code 46.2-2057 and VA DMV taxi page |
The federal number is a legal minimum, not a recommendation. Brokers and shippers routinely ask for $1 million on general freight, so a carrier sitting at $750,000 often loses loads it never knew it was eligible for.
The fix: set auto liability by what a bad crash would cost and what your customers require, then confirm any filings your operation needs are on record with the DMV or FMCSA before the vehicle moves.
When is a commercial umbrella policy worth it?
A commercial umbrella is worth it once you have vehicles on the road, crews on job sites, customers on your premises, or contracts that require limits above $2 million. Mistake five is the opposite of what you’d expect: buying an umbrella while the policies underneath it are still thin.
The case for the umbrella has gotten stronger. Marathon Strategies counted about 190 jury verdicts of $10 million or more against companies in 2025, up 40.7% from 2024, and Insurance Journal’s summary of the report lists Maryland with Texas, California and Florida as the states with the most. Premises liability verdicts alone hit a record $602 million across 20 cases, according to Risk & Insurance. Those aren’t small business numbers, but a jury that has learned to award eight figures doesn’t stop at $1 million because the defendant is a 12-person landscaping firm.
Here is where we part ways with the usual advice to just add an umbrella. An umbrella sits on top of your general liability, auto and employer’s liability, and the carrier will require minimum underlying limits, often $1 million on auto. If your auto is at a state minimum, you’ll have to raise it first anyway. And if a line isn’t scheduled underneath, the umbrella may not respond to it at all. A DC restaurant applying for an alcohol license through ABCA should confirm liquor liability is scheduled under its umbrella, not just added somewhere on the account.
Our ranking, if your budget forces an order: first, fix auto limits; second, raise general liability to match your contracts; third, add a $1 million to $2 million umbrella. A solo consultant with no vehicle, no office visitors and no contract requirement can reasonably skip the umbrella and spend that money on professional liability instead.
The fix: ask your broker for the umbrella’s required underlying limits before you buy it, and match your other policies to that schedule.
Which business insurance mistake is the most expensive?
Uninsured workers comp exposure is the most expensive, because it can mean state penalties plus paying an injured worker’s claim yourself. We ranked the five by two criteria: how large the uncovered loss can get, and how often we find the gap on policies customers bring us for review.
| Rank | Mistake | Why it costs so much | Fix |
|---|---|---|---|
| 1 | Missing workers comp in a state where you have employees | Penalties plus the full claim with no policy behind you | List every state employees work in and confirm each is on the policy |
| 2 | State minimum auto on a business vehicle | Crash costs above the limit land on the company | Start at $1 million combined single limit |
| 3 | No professional liability for advice or design work | General liability denies financial loss claims | Price an E&O policy and protect the retroactive date |
| 4 | Umbrella bought over thin underlying limits | The umbrella can refuse to drop down or respond | Match underlying limits to the umbrella’s schedule |
| 5 | General liability set below contract requirements | Lost bids and rushed endorsements | Set limits to your highest contract requirement |
If you fix only one item this quarter, make it the first row. The rest cost money when something goes wrong; a comp gap can cost money even when nothing does.
Frequently asked questions
Do I need workers comp with one employee in Virginia?
No, not with one or two. Virginia requires coverage once you regularly employ more than two people, counting part-time, seasonal and family workers. Subcontractors’ employees count too, even if the sub has its own policy, so check the Virginia Workers’ Compensation Commission’s employer guidance before assuming you’re under the line.
Do I need workers comp with one employee in Maryland or DC?
Yes. Both Maryland and DC require workers comp from the first employee, full or part-time. Sole proprietors and partners without employees are generally not required to carry it, but many buy it to satisfy contracts.
What is the minimum commercial auto insurance in Virginia?
For a standard vehicle, Virginia requires at least $50,000 per person and $100,000 per accident for bodily injury, plus $25,000 for property damage, on policies issued or renewed since January 1, 2025. Taxi operators must file insurance with the DMV, and interstate trucks of 10,001 pounds or more fall under the federal $750,000 floor in 49 CFR Part 387. Most businesses should carry far more than the state minimum.
Is $1 million in general liability enough for a small business?
It’s enough for many low-risk businesses, but it often falls short of what contracts in this region require. Going to $2 million/$4 million added only about $1 a month on average for Insureon’s customers, so the upgrade is usually cheap. Check your largest contract’s insurance clause and match it.
Does an umbrella policy cover professional liability?
Usually not. A commercial umbrella typically sits over general liability, auto and employer’s liability, and professional liability is written and limited separately. If your biggest exposure is a mistake in your work, raise the professional liability limit directly.
