Starting a new business in Utah is exciting—and comes with numerous decisions, tasks, and responsibilities. Among the many items on your startup checklist, obtaining proper business insurance is one of the most important steps you’ll take to protect your new venture.
Many new business owners either delay getting insurance, purchase inadequate coverage, or don’t fully understand what protection they need. This comprehensive checklist will help you identify the insurance coverage your new Utah business needs and avoid common pitfalls that could jeopardize everything you’re building.
Why Insurance Matters From Day One
You might be tempted to delay insurance purchases until your business is more established, but this approach is risky. Consider these scenarios:
- A client visits your home office and trips on your front step, breaking their arm
- A delivery driver backs into a parked car while making a business errand
- A fire in your office destroys your computer equipment and inventory
- A customer claims your product injured them
- An employee is injured on the job
- A cyberattack compromises customer data
Any of these situations could devastate a startup financially. Proper insurance protects your personal assets and your business’s ability to survive unexpected events.
Essential Business Insurance Coverage
General Liability Insurance
Nearly every business needs general liability insurance. It covers bodily injury, property damage, and personal/advertising injury claims against your business. Most commercial leases and many client contracts require it.
Typical coverage limits are $1 million per occurrence and $2 million aggregate, which costs most small businesses $400-$1,500 annually. If you’re operating from home initially, remember that your homeowners insurance excludes business activities—general liability fills this critical gap.
Professional Liability Insurance (Errors & Omissions)
If your business provides professional services or advice, you need professional liability insurance. This covers claims that your services caused financial harm due to errors, omissions, or negligence. General liability doesn’t cover professional mistakes, and even with excellent service, unhappy clients may sue.
Consultants, IT professionals, real estate agents, accountants, marketers, engineers, and anyone providing professional advice should carry this coverage. Some professional licenses in Utah require proof of professional liability insurance. Expect to pay $500-$3,000+ annually depending on your profession and revenue.
Commercial Property Insurance
Commercial property insurance protects your business property—buildings, equipment, inventory, furniture, and supplies—against fire, theft, vandalism, and other covered perils. Commercial landlords and lenders typically require this coverage.
If you have a physical location or significant equipment and inventory you couldn’t afford to replace out-of-pocket, you need commercial property insurance. Many insurers bundle general liability and commercial property into a Business Owner’s Policy (BOP) at a discounted rate, which often provides better value for small businesses.
Workers’ Compensation Insurance
This is required by Utah law if you have employees. Workers’ compensation covers medical expenses and lost wages for employees injured on the job, protects your business from employee injury lawsuits, and is required even for part-time or temporary employees.
You must obtain workers’ comp coverage before hiring your first employee. The Utah Labor Commission strictly enforces this requirement, and penalties for non-compliance can include fines up to $5,000 plus personal liability for all employee injury costs.
Commercial Auto Insurance
If you own business vehicles or if employees drive their own cars for work beyond commuting, you need commercial auto insurance. Personal auto insurance excludes business use. Mobile businesses, delivery services, and any business where employees drive between client sites need this coverage.
Additional Coverage to Consider
Cyber Liability Insurance is increasingly important for any business that stores customer data, accepts credit cards, or relies on computer systems. A data breach could cost tens of thousands of dollars even if no data is stolen, and small businesses are frequent targets.
Employment Practices Liability Insurance (EPLI) protects businesses with employees from claims of wrongful termination, discrimination, harassment, or retaliation. These claims are common and expensive to defend even when you’ve done nothing wrong.
Commercial Umbrella Insurance provides additional liability coverage above your base policies, typically $1-5 million in coverage for $200-600 annually. If you own real estate, have multiple business entities, or significant personal assets, umbrella coverage provides cost-effective additional protection.
Inland Marine Insurance covers business property that moves or is used off-premises—tools, equipment, laptops taken to different locations. Contractors, mobile businesses, and event vendors particularly need this coverage.
Utah-Specific Considerations
Utah has specific insurance requirements for certain businesses:
- Contractors must carry minimum liability insurance and register with Utah Division of Occupational and Professional Licensing
- Real estate professionals must carry errors & omissions insurance
- Certain healthcare providers have minimum malpractice insurance requirements
- Businesses serving alcohol need liquor liability coverage
If you’re operating in mountain areas or near ski resorts, expect higher premiums due to wildfire risk and harsh weather. Properties in earthquake zones along the Wasatch Fault may need earthquake coverage. Winter weather creates risks for frozen pipes and property damage that affect coverage needs and costs.
Common Mistakes New Business Owners Make
Using Personal Insurance for Business Activities: Your personal homeowners, auto, and umbrella policies explicitly exclude business activities. Don’t assume you’re covered.
Waiting Too Long: Get insurance before you officially launch. You’re at risk from day one, and you may need certificates of insurance before signing leases or contracts.
Choosing Based Solely on Price: The cheapest policy is rarely the best value. Focus on adequate coverage from a reliable insurer.
Not Understanding Coverage: Read your policies or have your agent explain them. Don’t discover gaps when you file a claim.
Not Updating Coverage: As your business grows, your insurance needs evolve. Review coverage annually and update property values, revenue figures, and coverage limits.
Forgetting Additional Insured Requirements: Many contracts require you to add clients or landlords as additional insureds. Forgetting could put you in breach of contract.
Misclassifying Workers: Treating employees as independent contractors doesn’t avoid the need for workers’ comp and could result in significant penalties.
Your New Business Insurance Checklist
Before Launch:
- Determine what insurance your business type requires by law
- Review contracts and leases for insurance requirements
- Get quotes from multiple insurers or work with an independent agent
- Purchase all necessary coverage before your first day of operation
- Obtain certificates of insurance for landlords or clients who require them
Within First Month:
- Review all policies to ensure you understand coverage
- File policies in an accessible location
- Set reminders for policy renewal dates
- Document all business property (photos, receipts, serial numbers)
- Ensure employees understand safety protocols
Ongoing:
- Review coverage annually as your business grows
- Update property values and coverage limits as needed
- Obtain certificates of insurance for new contracts
- Report changes in operations that might affect coverage
- Maintain safety protocols to prevent claims
Expected Insurance Costs
Every business is different, but here are general annual cost ranges:
Micro/Home-Based Business: $500-$2,500 total
- General Liability: $400-$800
- Professional Liability: $500-$1,500
Small Service Business (1-5 employees): $2,500-$10,000+ total
- BOP or GL + Property: $1,000-$2,500
- Professional Liability: $800-$2,500
- Workers’ Comp: $1,500-$5,000
- Commercial Auto: $1,200-$3,000 per vehicle
Retail or Restaurant: $5,000-$20,000+ total Contractor/Construction: $10,000-$50,000+ total
Actual costs depend on your revenue, number of employees, claims history, and specific risk factors.
Ways to Save on Business Insurance
- Bundle policies with one insurer for multi-policy discounts
- Increase deductibles to lower premiums (if you can afford higher out-of-pocket costs)
- Implement safety programs to reduce claims and qualify for discounts
- Pay annually rather than monthly to avoid installment fees
- Join professional associations that offer group insurance rates
- Maintain good credit as insurers often use credit in rating
- Shop around every few years to ensure competitive rates
- Work with an independent agent who can compare multiple carriers
Getting Started
Starting a business involves countless decisions, but insurance shouldn’t be overwhelming. Start by identifying your essential coverage needs based on your industry, operations, and legal requirements. Then work with a knowledgeable insurance professional who understands Utah businesses to find appropriate coverage at competitive rates.
Don’t let insurance fall to the bottom of your startup to-do list. The financial and legal protection it provides is foundational to your business’s long-term success and your personal financial security.
Let Us Help You Get Properly Insured
Starting a new business is challenging enough without navigating insurance complexities alone. We specialize in helping Utah startups and small businesses find the right insurance protection without paying for coverage they don’t need.
Contact us today for a free consultation about your new business insurance needs. We’ll discuss your business operations, identify required and recommended coverage, and provide quotes that fit your startup budget. Protect your new business from day one—we’re here to help you get it right.