FAQ
Commercial Insurance FAQs for Business Owners
Straight answers to the questions we hear most about general liability, commercial auto, workers' compensation, and commercial umbrella insurance, with typical coverage limits and requirements for Virginia, Maryland, and Washington, DC.
General Liability
General liability covers claims from third parties such as customers, vendors, and visitors for:
- Bodily injury (for example, a customer slips and falls at your location)
- Property damage (for example, your crew damages a client's property)
- Personal and advertising injury (libel, slander, copyright infringement in your advertising)
- Medical payments for minor injuries, regardless of fault
- Legal defense costs, even if the claim is groundless
General liability generally does not cover:
- Injuries to your own employees (that is workers' compensation)
- Accidents involving your vehicles (that is commercial auto)
- Professional mistakes or bad advice (that is professional liability / E&O)
- Damage to your own property (that is commercial property)
- Intentional acts and most pollution claims
The standard structure is $1 million per occurrence / $2 million general aggregate. Many landlords, general contractors, and clients require at least this, and some require more. If a contract asks for $2 million per occurrence or higher, a commercial umbrella is usually the cost-effective way to reach that limit.
A certificate of insurance is a one-page document proving you have coverage. Clients often also ask to be added as an additional insured, which extends your policy's protection to them for claims arising from your work. They may also require a waiver of subrogation, which prevents your insurer from seeking reimbursement from them after paying a claim. Both are endorsements, so request them before the job starts.
- Occurrence: covers incidents that happen during the policy period, even if the claim is filed years later. This is standard for general liability.
- Claims-made: covers claims only if the policy is active when the claim is filed. This is common for professional liability and requires attention to retroactive dates and extended reporting periods.
A Business Owner's Policy bundles general liability with commercial property (and often business income) at a lower price than buying them separately. It is designed for small to mid-size businesses with lower-risk operations. Higher-risk operations such as contractors, restaurants with liquor service, and trucking generally need standalone policies.
Commercial Auto
Often not. Personal policies typically exclude or restrict vehicles used for business, especially deliveries, hauling, carrying tools or equipment, or for-hire transportation. If you are not sure, ask your agent before an accident, not after.
A commercial auto policy can include:
- Liability: injuries and property damage you cause to others
- Collision: damage to your vehicle from a crash
- Comprehensive: theft, vandalism, fire, weather, or hitting an animal
- Uninsured/underinsured motorist: when the at-fault driver has no or too little coverage
- Medical payments: medical costs for you and your passengers
- Optional coverages: hired and non-owned auto, towing, rental reimbursement, and motor truck cargo
That is called non-owned auto exposure. If an employee causes an accident while running a business errand in a personal vehicle, your business can be sued. Hired and non-owned auto liability coverage responds to this and is inexpensive relative to the risk. It is commonly missed.
For for-hire motor carriers operating in Virginia:
- $750,000 combined bodily injury and property damage for vehicles over 10,000 lbs GVWR
- $300,000 for vehicles between 7,500 and 10,000 lbs GVWR
- Interstate carriers must also meet federal minimums, which can be higher depending on cargo
Most commercial customers and general contractors require $1 million combined single limit regardless of the legal minimum.
Yes. Virginia does not exempt couriers from insurance requirements. For passenger cars and vehicles at or under 7,500 lbs GVWR, there are two tiers:
- Available but not yet dispatched: $25,000 per person / $50,000 per incident bodily injury, and $20,000 property damage
- En route with a delivery: $100,000 per person / $300,000 per incident bodily injury, and $50,000 property damage
Vehicles with a gross vehicle weight rating of 10,001 lbs or more must display a USDOT number, whether operating only in Virginia or across state lines. For-hire carriers at that weight generally also need Virginia intrastate operating authority from the DMV.
Workers' Compensation
It depends on where your employees work:
- Virginia: employers who regularly employ more than two full-time or part-time employees (three or more). Subcontractors' employees can count toward that total.
- Maryland: nearly every employer with one or more employees.
- Washington, DC: employers with one or more employees, including part-time and seasonal staff.
If you have employees in more than one jurisdiction, make sure each location's rules are addressed in your policy.
Workers' compensation provides:
- Medical treatment for work-related injury or illness
- Partial wage replacement while an employee cannot work
- Disability benefits for permanent impairment
- Death benefits for dependents
- Your legal defense if a claim is disputed
In exchange, employees generally cannot sue the employer for the workplace injury.
Three main factors drive the premium:
- Payroll (premium is quoted per $100 of payroll)
- Class codes (job types, with higher-risk work costing more)
- Experience modification rate (e-mod): a multiplier based on your claims history relative to similar businesses
Premium is usually audited at year-end against actual payroll, so you may owe more or receive a refund.
Workers' compensation has two parts. Part One pays statutory benefits. Part Two, employer's liability, covers lawsuits that fall outside the comp system, such as third-party-over actions or certain family claims. Typical limits are $100,000 / $500,000 / $100,000 (each accident / disease-policy limit / disease-each employee), though many businesses carry $500,000 or $1,000,000 to satisfy contract requirements or to qualify for umbrella coverage.
Sometimes. If a subcontractor does not carry their own coverage, or if they are reclassified as your employee, you can be responsible for their injuries. Always collect a certificate of workers' compensation from subcontractors, and do not rely on a 1099 alone, because the label does not determine the classification. The working relationship does.
In many states owners can elect to exclude themselves, but rules vary by state and entity type, and excluding yourself means no coverage if you are hurt on the job. Confirm the rules for your state and business structure with your agent before deciding.
Commercial Umbrella
A commercial umbrella is extra liability coverage that sits on top of your primary policies and pays once their limits are exhausted. It typically extends:
- General liability
- Commercial auto liability
- Employer's liability (from workers' compensation)
Limits typically range from $1 million to $10 million or more, often purchased in $1 million increments. Factors to weigh:
- Contract requirements (many general contractors and landlords require $2 to $5 million)
- Fleet size and miles driven
- Foot traffic at your location
- Severity of the work you do (heavy equipment, work at height, hauling)
- Your net worth and what a judgment could put at risk
Carriers usually require minimum underlying limits, commonly:
- $1 million general liability per occurrence
- $1 million combined single limit auto
- $500,000 or $1 million employer's liability
Generally not professional liability, cyber liability, workers' compensation benefits themselves, or damage to your own property. Some umbrellas also exclude specific operations, such as certain hauling or liquor exposures, so read the exclusions.
- Umbrella: can broaden coverage beyond the primary policies and may fill some gaps, subject to a self-insured retention (SIR).
- Excess: typically follows the form of the underlying policy exactly, simply adding more limit on top.
Buying and Managing Coverage
Pricing is driven by:
- Industry and type of operations
- Payroll and revenue
- Claims history
- Number and type of vehicles and driver records
- Location
- Limits and deductibles you choose
- Safety practices, training, and loss-control measures
Have the following ready:
- Business name, entity type, and years in business
- Description of operations and revenue
- Payroll by job type
- Vehicle list (year, make, model, VIN) and driver list with license numbers
- Prior carrier and loss runs (usually 3 to 5 years)
- Contracts that specify insurance requirements
Check the following:
- Compare your limits to every contract's insurance requirements
- Review whether your policy covers the services you actually perform
- Confirm subcontractors are insured and name you as additional insured
- Re-evaluate after growth, new locations, new vehicles, or new services
- Review your coverage once a year, not just at renewal
In my capacity as a small business owner and in my capacity as a senior official associated with nonprofits, Rodney Thompson (TransAtlantic Commercial Insurance) has served me and these organizations brilliantly.
I have only kudos to share.
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Trans-Atlantic Insurance will go above and beyond the Call of Duty to ensure Owner-Operators receives the best possible rates. Mr. Rodney, JDIA Enterprise, Inc and my family, we are grateful to you for saving us a bundle on insurance rates...Thanks again.
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