The State of Ohio provides business owners with great opportunities for growth and expansion. But before you start a new company in Ohio or move your current operations to the Buckeye State, you should have a basic understanding of the state’s requirements for commercial insurance and related best practices.
What Types of Business Insurance Are Required in Ohio?
All insurance offered in Ohio goes through the Ohio Department of Insurance (ODI). This agency is responsible for making sure the market is stable yet competitive for insurers and fair to insureds. ODI also oversees and regulates insurance carriers, the insurance products they offer for sale in Ohio, and the licensed insurance agents and brokers who sell or procure those products.
Importantly, ODI requires all Ohio businesses with one or more full or part-time employees to maintain workers’ compensation insurance coverage. Further, all businesses whose employees are required to use vehicles to perform their job duties must also have commercial auto insurance policies.
ODI suggests that companies also carry general liability coverage and professional liability insurance. Although they’re not mandatory, ODI strongly recommends these coverages.
Here’s a quick overview of both these mandatory coverages and suggested additional policies.
Workers’ Compensation Insurance
Workers’ compensation coverage has been mandatory for Ohio employers since 1913. Except for authorized self-insured employers, the Ohio Bureau of Workers’ Compensation (OBWC) is the state’s exclusive provider of insurance coverage for work-related injuries, diseases, and deaths. OBWC is the largest state-operated (and second-largest-overall) provider of workers’ compensation insurance in the United States. As of 2021, OBWC’s assets under management exceeded $24 billion.
The Ohio Industrial Commission presides over appeals taken from OBWC coverage determinations.
Tips on Ohio workers’ compensation insurance requirements:
- Business owners need not cover themselves—just their employees.
- Volunteers performing non-emergency duties for private employers and non-profit organizations need not be covered.
- Household employers need not provide coverage for domestic workers earning less than $160.00 in any consecutive 13-week period.
Commercial Auto Policies
It is illegal to drive in Ohio without insurance. It’s also illegal for vehicle owners—including businesses—to allow anyone else to drive their vehicles without insurance. Ohio law requires all commercial auto policies to include the following coverage minimums of at least:
- $25,000 for all property damaged in an incident;
- $50,000 for all people injured in an accident; and
- $25,000 for each person injured in an accident.
Premiums paid under a commercial auto insurance policy will of course vary depending on hazards unique to the industry in which the business operates, and the types of vehicles being insured.
Pro Tip: A personal vehicle that is sometimes used for business purposes should, as a best practice, also be scheduled as a covered vehicle under a business’s commercial auto policy (personal auto policies may specifically exclude coverage for accidents suffered while a personal vehicle is being used for a business purpose).
Additional Business Insurance Coverage Recommendations for Ohio Businesses
To protect your business from other risks, consider obtaining additional specialty coverages beyond those mandated by law. These policies may be worth investing in:
- Cyber liability insurance can cover losses sustained from data breaches and/or losses suffered from ransomware or other internet-based attacks.
- Inland marine insurance covers your inventory, products, and equipment while they’re transported across the country from one location to another.
- Commercial property coverage offers additional protection for your physical assets. Losses from fire, theft, or storm damage may be covered under this policy type.
- Business interruption policies may cover lost income and extra expenses suffered when business operations are interrupted or substantially affected by a covered peril.
These specialty insurance policies can fill coverage gaps where your business’s assets and finances are exposed to loss.
Whether or not a business has specialized coverage needs, most businesses also have commercial general liability and/or professional liability policies.
General Liability Insurance
General liability policies protect against everyday risks including disputes with customers or vendors, or injuries sustained by visitors to your place of business. For example, a customer gets hurt while shopping in your store and tries to file a personal injury suit, claiming negligence on your part. Your commercial general liability policy may protect your business in several ways, including by providing coverage for:
- Medical expense liability
- Cost of defense fees to your attorney
- Bodily or personal injury claims made by a third party
- Advertising injury claims by a third party
- Third-party property damage claims against your business
- Payment of settlements or jury awards
Professional Liability Policies
Ohio professionals who don’t have a physical store or warehouse also face their own risks. A professional liability policy can protect professionals, like freelance writers, graphic designers, consultants, interior designers, market research firms, and advertising agencies, for example, from claims allegedly related to the work they perform for their clients.
This insurance protects you if you’re sued for the following circumstances:
- Malpractice (i.e., professional negligence);
- Losses sustained from poor or flawed work;
- Requirements to indemnify clients for suits brought against them by third parties; and/or
- Losses sustained from work that is incomplete, late, or not submitted.
Ultimately, professional liability insurance protects professionals in the event that their clients sustain loss or injury in connection with their services. The cost of defending a malpractice lawsuit can be enormous, and paying the costs of defense out-of-pocket is not realistic for most professionals, which makes professional liability insurance a good investment. Although Ohio law does not require professionals to carry professional liability insurance, in certain professions (e.g., law, medicine), clients must provide informed consents to receive services from practitioners who lack malpractice coverage.
Did you know we offer a free tool to help business owners limit unwanted litigation? It’s called the CM6 CheckUp.
Take your free assessment today.
Don’t Put Off Getting Your Required Ohio Business Insurances
Remember—your business is legally required to carry:
- Workers’ compensation insurance if your business employs a single person; and
- Commercial auto insurance if your business uses vehicles for business purposes.
Failure to comply with state insurance laws can quickly cost your business—and potentially you, personally—a fortune in fines and fees. Specifically, OBWC and/or Ohio prosecutors can take the following actions:
- Place liens on your properties;
- Charge a $30 fee for each premium you fail to pay on time;
- Levy a 15% penalty against you for the amount due;
- Your assets under lien could be sold and given to the state as part of a judgment; and/or
- Prosecute you criminally.
As you can see, it’s much more affordable to carry the required coverages and protect your business.
We all know Ohio is a great place to start and maintain your business. Get your business insurance squared away and protect yourself, your employees, and the business you’ve worked hard to build.
Please contact Gertsburg Licata, home of CoverMySix®, for more information about our services, including assessing your current business insurance policies and coverages. Gertsburg Licata is not an insurance agent or insurance broker; contact your insurance agent or broker to obtain coverage or ask questions regarding what specific coverage you or your business may have. At Gertsburg Licata, we help you through the legal challenges facing your business so that you can focus on making it grow. We invite you to call 216-573-6000 or fill out our contact form for a complimentary consultation with one of our attorneys.
Louis J. Licata, Esq. is a managing partner at Gertsburg Licata. He can be reached at [email protected] or by phone at (216) 573-6000.
