Which states require a Business Owner's Policy by law?

Find out if a business owner's policy is a legal requirement and how it can help protect your business.

Marcel Deer - Writer for NEXT Insurance
By Marcel Deer
Kelly Hendrickse - editor for NEXT Insurance
Edited by Kelly Hendrickse
Matt Crawford for NEXT Insurance
Fact-check by Matt Crawford

Published June 19, 2023.

Typically, no state legally requires you to have a business owner's policy (BOP). However, there are some industries or circumstances where the policies typically under a BOP may be required.

» Check out these small business insurance basics to know more

Who may require a BOP?

A BOP usually is made up of two policies. Let's look at an example of when each of these policies may be required:

  • General liability insurance - Some agencies can ask that you have this coverage before issuing licenses or permits. This can happen in most construction jobs.
  • Commercial property insurance - Some property owners may require you to have this policy before you can sign a lease. Lenders could also ask that you have this coverage if you're looking to pay for the property with a loan.

Which insurance policies can be required by law?

While BOP may not be a legal requirement, some business insurance policies are.

For example, every state except Texas typically requires any business with employees to have workers' compensation insurance. There are exemptions, so be sure to check your specific state requirements before deciding for or against this coverage.

Additionally, any business that owns vehicles can be required to have commercial auto insurance. This is the case in almost every state. But it's best to look into any exclusions before purchasing this policy.

Prioritize your business's security with NEXT

While a BOP and the policies it includes aren't necessarily a legal requirement, it can help protect your business from various risks, such as property damage and third-party injuries. Plus, it can help you gain clients because it can add credibility to your business.

With NEXT, you can get affordable tailored business insurance that suits your industry and business requirements and needs. To find out more, you can chat with any of our U.S.-based licensed professionals. And to view your options, simply apply online and get an instant quote in under 10 minutes.

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