Does Business Insurance Cover Locations in Multiple States?
Written by
Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
Reviewed by
Cara Carlone is a licensed P&C agent with 20 years of experience. She has her P&C license in RI and TX and holds CPCU, API, and AINS designations.
Business owners have to consider all potential risks to their property and inventory, and when they operate in more than one location, that only creates more areas of concern. If your business has multiple locations, all of them need to be protected equally. But if your business operates in more than one state, do you need multiple business insurance policies? Answering this can help you avoid further potential difficulties if you must file a claim.
Fortunately, independent insurance agents are experts in business insurance and how much coverage you need, no matter how many locations you have. They know exactly how to protect your business against all kinds of potential threats across the map, and they’ll get you set up with all the coverage you need long before you need it. But before we get ahead of ourselves, let’s take a closer look at business insurance requirements for companies operating in multiple states.
If My Business Operates in More Than One State, Do I Need Multiple Insurance Policies?
Luckily for those business owners who have several locations, the answer is no. Standard business insurance policies work across the country. It’s only when you have locations outside the U.S. or Canada that coverage concerns could get complicated. But if you stay within the country and just have two or more locations in different states, you should be adequately covered by one policy.
Just make sure that you communicate with your independent insurance agent about which states your business operates in when you first purchase coverage. Insurance companies may charge different rates for certain coverages depending on your business’s location, and if you’re operating in more than one state, they’ll need to factor this into your premium. Be honest from the start in order to avoid a potential hassle later on.
How Does My Business Insurance Cover Me in Dual States?
You’ll essentially have the same protections in both states where your business is located. Business insurance provides protection for your property and inventory, as well as liabilities and other common perils.
Since your business insurance covers you across the country, your business will have all these important protections across all of its locations. Again, just be sure to detail all of your business’s locations when first signing up for coverage.
What Kind of Business Insurance Do I Need?
Standard business insurance policies provide the basic protections needed by all businesses, whatever their location. Whether you operate in one state or multiple states, your business should at least have the following coverages provided by a basic business insurance policy:
- Commercial property insurance: Covers loss of or damage to your physical property, including your office space’s structure and inventory. Protected mishaps include fires, certain kinds of storm damage, theft, and more.
- Workers’ compensation insurance: Covers financial losses if your employees get ill, injured, or die from a work-related incident or job task. Coverage is mandatory in most states, depending on company size and the type of work being performed.
- Business vehicle insurance: Covers company vehicles against perils like theft, vandalism, and natural disasters.
- Commercial general liability insurance: Covers property damage or injury claims made by a third party.
These basic coverages are provided by standard business insurance policies across the board. However, your unique business may need more coverage to get the full picture of protection.
Additional Business Insurance Coverage to Consider
In the event your unique business requires more protection than what’s included in standard business insurance policies, you may need to add on several more types of coverage. It’s best to get set up with all the protection you may ever need from the start.
Optional add-on coverages to business insurance include:
- Professional liability insurance: Also known as "errors and omissions insurance," this coverage protects against costs related to claims made by clients who have suffered financial loss due to the work they've hired you for. Professionals such as consultants typically need this coverage.
- Business income insurance: Covers the financial loss suffered while a business is closed due to covered disasters. Coverage can pay for ongoing operating expenses like rent and employee salaries.
- Crime insurance: Covers losses due to criminal activity such as theft or fraud. Coverage also applies to employees who steal from the company.
- Boiler & machinery insurance: Also known as "equipment breakdown insurance," coverage applies to electric equipment in the building (e.g., AC units and boilers) that breaks down due to power surges, etc.
- Cyber liability insurance: Covers the costs associated with incidents of data breach and cyberattacks that may expose, sell, or distribute sensitive or private data and information like customer credit card numbers.
- Employment practices liability insurance: Covers costs associated with employee claims of various illegal practices, such as wrongful termination, sexual harassment, discrimination, and more.
Work with your independent insurance agent to determine all the areas in which your unique business might need additional coverage. The more complex your business and its operations are, the more types of coverage will be required to protect you fully.
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Can I Have Different Insurance Coverages in Each State?
While it is possible to have different coverages for each of your business’s locations, it’s not actually wise to do this. You could, for example, have commercial auto insurance for one of your business’s locations but not the others. This isn’t recommended, though, because you'll more than likely end up with overlapping policies that compete to respond to the same claim, and this could get messy. Keep it simple by having the same insurance for all of your business’s locations.
Is Business Insurance Tax-Deductible in Both States?
As long as your business insurance serves a business purpose, then yes, your policy is likely tax-deductible in each state. At the federal level, the IRS categorizes business insurance as a business expense, which is why you are allowed to deduct your premiums from your taxable income. If you have any questions about deducting your business insurance costs from your taxes, your independent insurance agent or accountant can help.
What Doesn’t Business Insurance Cover?
No matter how many states you’re located in, standard business insurance policies have two main perils that are never covered: flood damage and earthquake damage. Special flood insurance and earth movement policies would be required to protect your business from damage and/or suspended operations caused by these types of disasters. Businesses with one or more locations in a coastal state should highly consider getting at least flood insurance.
If your business has at least one location in an area that’s prone to flooding, your mortgage lender may actually require you to purchase flood insurance. Otherwise, flood insurance is still an excellent idea to have if you’re in a flood-prone area. Likewise, if one location is in an area prone to earthquakes, landslides, etc., you’ll want to consider an earth movement policy.
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Here’s How an Independent Insurance Agent Can Help
When it comes to protecting your business across multiple states and everything else, no one’s better equipped to help than an independent insurance agent. These agents search through multiple carriers to find providers who specialize in business insurance and add-on coverages, deliver quotes from a number of different sources, and walk you through them all to find the best blend of coverage and cost.