6 Small Business Insurance in Minnesota for 2023

Thang Truong
Thang Truong
Updated on:

Minnesota was ranked the 7th best state to start a business for the second year in a row by CNBC. It’s also the highest ranked midwestern state in the country. CNBC looked at things like infrastructure, the cost of doing business, life and health, and the economy. Minnesota offers a good mix of urban and rural living, and the residents are eager to support local businesses. 

No matter where you start a business, you’ll need to be prepared. You probably already know that starting your own business isn’t cheap. There are tons of expenses you need to pay, especially in the first year. One thing you shouldn’t skip is business insurance. It would be uniquely heartbreaking if your business was starting to take off, only to be derailed by a lawsuit. 

Best small business insurance companies in Minnesota

There are tons of insurance companies out there, ranging from insurtech startups to established, traditional insurance companies. Obviously, you don’t want to spend all of your very limited free time shopping for insurance, so how do you choose a company? The good news is that we’ve evaluated hundreds of insurance companies for you based on things like cost, ease of getting a quote, and flexible coverage and these are the top companies we recommend. 

  • InsurePro: Best for flexible, on-demand, pay-per-day coverage of general liability, commercial auto, and workers comp insurance
  • Simply Business: Best for finding low-cost coverage (general liability, workers comp, professional liability, and commercial auto insurance)
  • CoverWallet: Best for comparing several quotes of general liability, workers comp, and professional insurance online
  • NEXT: Best for contractors general liability insurance
  • Progressive: Best Overall for commercial auto and commercial truck insurance
  • Tivly: Best if you prefer working with knowledgeable agents to find all types of small business insurance coverage
InsurePro– Specialize in finding on-demand and short-term coverage
– Affordable rates
– May not offer every type of policy
– Can’t make claims through InsurePro 
Simply Business– Get quotes from multiple insurance companies
– Optimize to find low-cost coverage by working with several insurance companies who can offer affordable rates 
– You have to file claims with the carriers directly, not through Simply Business 
– Some quotes may not be available online
CoverWallet – Easy to get several quotes from one form
– Wide range of policies available
– Manage all your policies in your “wallet”
– You will only get quotes from partner companies
– Only third party quotes (CW is a broker, not an insurance company)
NEXT– Specialize in contractor insurance
– Manage policies online
– Get quick quotes
– Handles all its own claims
– Mostly provides general liability insurance: they may not have everything you need
– May not provide coverage to all industries yet
Progressive– One of only companies that will consistently provide online quotes for commercial vehicles – Bundle with other policies
– Many discounts available
– Only provides commercial truck/vehicle coverage directly: other business coverage is by third party
– Customer satisfaction rating may be desirable
Tivly– Knowledgeable agents
– Provide all types of coverages
– Cater to small businesses in all industries, including niche firms
– No online quotes
– You have to work with agents

What does small business insurance cover in Minnesota? 

Small business owners have a ton of expenses. You know you need insurance, but you don’t want to pay for anything that isn’t absolutely necessary. 

Below is a list of the most common types of business insurance and who needs them. The good news is that in Minnesota, the only kinds of business insurance that are required are workers compensation and commercial auto insurance (if you use a vehicle for business, other than just commuting back and forth). General liability insurance would also be a good purchase. 

General liability insurance 

General liability insurance covers you for:

  • Third-party bodily injury
  • Third party property damage

Did you know that slips and falls are the fourth most common reason businesses are sued? And with the exorbitant cost of health care these days, you can see how just one lawsuit can bankrupt you. 

Another reason businesses are sued is for property damage. If you enter people’s homes for any reason, such as a cleaning business, you need general liability insurance so that just in case you accidentally break that priceless piece of antique furniture, you’ll be covered. 

Although advertising injury sounds like what happens when you have a thick stack of advertising flyers thrown at you, it covers slander, libel, theft of ideas and copyright infringement. You may have any of these happen to you as a small business owner. For example, say you’re a photographer and you come across an ad for a new online clothing store. That’s your photo, but the business didn’t pay you for it. You could sue for copyright infringement. 

Advertising injury does not cover false advertising claims you make, however. If you come up with a new vitamin supplement that you say will result in users losing 20 pounds, your customers could sue you (assuming it isn’t true) and general liability would NOT cover you because you made false claims in your ads. 

Learn more at general liability insurance cost and the best general liability insurance companies 

Commercial property insurance 

Commercial property insurance protects your property and your equipment from losses. It covers losses due to:

  • Theft
  • Vandalism
  • Weather
  • Lightning strikes
  • Fire
  • Smoke
  • Water damage

If your business is forced to close for any of the reasons listed in the policy, you will be covered for repairs and lost income. Oftentimes, landlords will require you to have commercial property insurance before they will rent or lease a space. 

If flood, hurricane, or earthquake is common in your area, you need to add them in your commercial property insurance policy as additional coverages or endorsements. 

That part about “reasons listed in the policy” is important. Usually, floods and earthquakes are not covered under commercial property insurance, so if you live in an area prone to floods or earthquakes, be sure to add them to your policy. 

Learn more at commercial property insurance cost and the best commercial property insurance companies

Business Owners Policy (BOP) 

A Business Owner’s Policy combines general liability insurance with commercial property insurance, therefore saving you money over buying the policies separately. Also, the often include another type of insurance as well, such as:

  • Business interruption insurance
  • Cyber liability
  • Crime
  • Rented vehicles
  • Equipment breakdown
  • Employment practices liability insurance

Shop around for the policy that provides the types of coverage you need. 

Learn more at BOP insurance cost and the best BOP insurance companies

Professional liability insurance 

If you provide services or advice in exchange for money, you probably need professional liability insurance (PLI). Sometimes this type of coverage is called malpractice insurance, especially when it refers to medical or legal professionals, and sometimes it’s called errors and omissions insurance, but it’s all the same thing. 

PLI covers you if you make a mistake or neglect to do something that causes your customer financial harm. For example, you are a real estate agent and you show houses to a nice young couple. They find one they love and are very excited. Sadly, you missed the deadline to put in their offer and another family bought the house. They could sue you for this mistake. 

Learn more at professional liability insurance cost and the best professional liability insurance companies

Workers comp insurance 

Workers compensation coverage is required in Minnesota if you have even one employee, even if they are part-time, even if they are members of your own family. Only sole proprietors and LLCs do not have to cover themselves. Other exceptions are:

  • Individuals having work done to their home
  • Nonprofits with no paid employees
  • Corporate officers who own more than 25% of the business and have no other employees

Workers comp protects you, the employer, from having to pay medical costs and lost wages for injured employers who cannot work. It also protects the employees from having to pay for their own medical costs, and it helps by paying them for lost wages while they recover. Should the worst happen, workers comp will also pay death benefits to the family of the accident victim. 

Minnesota is a non NCCI state, meaning that instead of using the class codes for various professions that everyone else uses, Minnesota uses their own codes. This makes it a little harder to guess what you’ll pay. Also, workers compensation rates are expected to go up slightly this year. 

Learn more at workers comp insurance cost and the best workers comp insurance companies

Commercial auto insurance 

Commercial auto insurance covers you if you are in an accident while using your vehicle for work. Personal auto coverage will not cover you if you use your vehicle for work-related purposes (other than commuting back and forth to your job). 

Minnesota law requires you to have at least 30/60/10, or $30,000 bodily injury liability, $60,000 per accident and $10,000 in property liability coverage. You are also required to have uninsured and underinsured liability coverage and a minimum of $40,000 in PIP (personal injury protection). 

If you want to cover damages to your own property and your own vehicle, you’ll need collision and comprehensive insurance. 

Trucking companies need more insurance to comply with state and federal regulations. 

These are the bare minimums. You would probably want more coverage, otherwise just one accident can easily bankrupt you. 

Learn more at commercial auto insurance cost and the best commercial auto insurance companies

Cyber liability insurance 

Most businesses these days store at least some customer information online. Cyber liability insurance will protect you in the event of a data breach, malware attack, or ransomware attack. If you store things like credit card information, financial information, or medical records, you need cyber liability insurance. The cost of cybercrime is predicted to $10.5 trillion dollars by 2025. In case you’ve forgotten, that’s only three years away. 

Learn more at cyber liability insurance cost and the best cyber liability insurance companies

Business interruption insurance 

If your business had to close due to an emergency, how would you pay your bills? Business interruption insurance provides protection against financial losses if your business needs to close temporarily due to a reason listed on the policy. 

That last part is important. If your business interruption insurance does not cover pandemics, as many small business owners found out in 2020, then you will not be covered by business interruption insurance. Covered perils are usually things like:

  • Fire
  • Theft
  • Wind
  • Lightning
  • Falling objects

If floods or hurricanes or earthquakes are common in your area, you’ll need to add those as an additional expense. It may increase the premiums of your policy but you will have proper protection for your income.  

Learn more at business interruption insurance cost and the best business interruption insurance companies

Directors & Officers insurance (D&O) 

Directors & Officers insurance is like E&O (errors & omissions, also known as professional liability insurance) but for officers and directors of a company. It protects them from personal losses in the event the company is sued for some decision they made. A D&O policy will pay for legal fees to defend the company against lawsuits, either civil lawsuits or criminal lawsuits (often these are filed simultaneously). 

Learn more at D&O insurance cost and the best D&O insurance companies

Which business insurance coverage do I really need in Minnesota? 

There are a lot of different types of business insurance available but not all of them are necessary. 

  • Most small businesses should get general liability insurance. It protects you from the most common lawsuits filed against small businesses. 
  • If you use vehicles for business purposes, you’ll need commercial vehicle insurance. It is required by state law.  
  • If you have employees, you need workers compensation insurance. It is also required by state law. 
  • If you are in the business of providing services or advice to your customers, it is very likely that you will need professional liability, or E&O insurance, also called malpractice insurance.

Small business insurance costs in Minnesota

The average business in Minnesota pays about $47 a month, or $564 per year, for a $1MM general liability insurance policy. If you have more policies, you’ll pay more. The best thing to do is get quotes from at least three different companies, so you won’t pay more than you have to. 

Below are the average costs in Minnesota for different small business insurance coverages: 

Minnesota business insurance coveragesAverage costs
General liability$47 per month
Business Owners Policy (BOP)$143 per month
Workers comp insurance$0.99 per $100 payroll
Commercial auto insurance$114 per month
Professional liability insurance$68 per month
Cyber liability insurance$113 per month
Commercial property insurance$104 per month

Please keep in mind that these are just the average rates that hundreds of thousands small businesses pay in Minnesota. Your rates will be different. Be sure to shop around with a few companies and compare several quotes to find the cheapest one for your business.

Below are some of the most popular small businesses in Minnesota that need to buy business insurance policies.  

RestaurantsConstruction firmsPlumbing
LandscapingHVAC contractorHandyman
Law firmsDaycareCatering
Hair & beauty salonsNail salonsBarber shops
ChurchesElectricianFlooring contractor
Pressure washingFinancial & investment advisorsCPA & accountants
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at realtor.com, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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