What are the requirements for business insurance in Arizona?
Arizona has some very specific insurance requirements for businesses in the state.
Businesses in Arizona must carry workers’ compensation insurance if they have even one employee — including an owner or officer.
In addition to workers’ compensation insurance, any business offering services or products to customers should consider liability coverage. Liability insurance covers lawsuits and claims related to your business operations.
You may also need additional insurance coverage, such as commercial auto coverage or property coverage, depending on the type of business you run.
What are the types of business insurance in Arizona?
Here are some common types of business insurance policies in Arizona:
General liability
General liability insurance pays for claims involving personal injury or property damage to a third party. It’s often required by vendors or other businesses with which you work.
There are many types of business risks that are not covered under a general liability business insurance policy.
Below are some of the exclusions:
- Intentional damage or injury.
- Injury due to liquor.
- Certain types of pollution.
- Professional Liability Exclusions
Professional liability
Often called “errors and omissions” coverage, professional liability insurance covers claims alleging negligence, misrepresentation, breach of warranty, and other allegations your company did not meet its obligations to others. Insurance companies often require you to have this type of coverage if they provide general liability insurance.
Here are some of the common exclusions in this type of business insurance policy:
- Any claim that results from dishonesty, fraud or error or omission in the performance of a service.
- Any claim arising out of a breach by you of any term of your contract with your client.
- Claims arising out of the infringement of copyright, patent or trademark.
- Any claims relating to the transmission of a computer virus.
- Any claims relating to bodily injury, property damage or personal and advertising injury.
Workers’ compensation
Workers’ comp is required in most states for businesses with employees. It pays medical expenses and disability benefits for employees injured on the job or who contract an occupational disease (such as carpal tunnel syndrome). Workers’ comp also reimburses employers for legal costs associated with employee injury claims such as hiring lawyers to defend against the claim and paying judgments awarded to the employee in court.
A workers compensation policy covers only certain injuries that occur in the course of employment.
It excludes injuries that are:
- Self-inflicted.
- Due to horseplay.
- Voluntary participation in hazardous activity outside the scope of employment.
- Caused by an employee’s intoxication by drugs or alcohol, or use of illegal substances.
Commercial property insurance
If you own a building or other physical assets that are vital to your business operations, commercial property insurance will help protect them.
These are some of the things that aren’t covered by commercial property business insurance:
- Property in transit
- Off-premises theft of property
- Credit card fraud
- Employee dishonesty
Product liability coverage
The product liability coverage is usually offered in a business owner’s policy. It protects the small business from claims of property damage or bodily injury that arose from the use of the products that you sell. If a consumer buys a product from your company and suffers an injury because of it, your company could be held liable for that injury. Luckily, with product liability coverage, you can protect your business from such claims. Product liability claims have skyrocketed in recent years, so it’s important to have this kind of coverage if your company makes products available for sale in Arizona.
The following items are excluded from coverage under the product liability insurance policy:
- Warranty obligations
- Recall costs
- Damages from bodily injury or property damage caused by faulty or defective workmanship
How much does business insurance cost in Arizona?
There are many factors that affect how much you pay for business insurance, including:
The type of industry you’re in.
Some industries are inherently more dangerous than others. If your business is at higher risk for accidents, fires or theft, you’ll likely pay more to insure it.
Your claims history.
If you’ve filed a lot of claims with your insurer in the past, your premiums may go up as a result. However, if you haven’t filed any claims, your premiums may be lower thanks to something called loss credits.
The cost to replace your property.
If replacing your business’s property would be very expensive (for example, if your company has $10 million worth of equipment), then it will cost more to insure it.
Your location and demographics.
Companies located in areas prone to crime or natural disasters often pay higher premiums (or aren’t eligible for coverage at all).
How to choose the best business insurance in Arizona
Here is a guide to help you get started on choosing the best business insurance for your company:
- Assess your needs. The first step in finding the right insurance policy is evaluating exactly what you need it to cover. Business owners should take inventory of their physical equipment and property, their employees and the liability risk of their industry.
- It’s also important to consider your budget. It’s a good idea to talk with an insurance agent about what coverage is necessary for your business as well as how much extra coverage can be added based on your budget.
- Research carriers. Once you know what type of coverage you are looking for, it’s time to do some research into potential insurance carriers. One useful tool is an independent insurance agent who has access to multiple carriers and can help you choose the right one based on your needs and budget.