South Carolina Business Insurance Requirements: A Complete Guide

Operating a business in South Carolina comes with certain insurance obligations. While the state has fewer mandated coverages than others, companies still need proper protections for their assets and legal liabilities.

This guide will outline the key South Carolina business insurance requirements plus recommended policies for companies in the state.

Overview of Mandatory South Carolina Business Insurance

South Carolina only requires two specific types of insurance coverage for companies:

Workers’ Compensation: Legally mandated for businesses with 4 or more employees. Provides medical, disability, and death benefits for job-related injuries.

Commercial Auto: Required for company-owned vehicles. Covers liability for injuries and damage caused by work vehicles.

Additionally, businesses may need other specialized policies to obtain licenses or comply with regulations in their industry:

• Professional liability insurance for advice-giving professions
• Surety bonds for contractors doing government projects
• Builders risk policies for construction companies

But beyond these conditionally required policies, experts strongly advise securing several core coverages like property insurance, liability insurance, cyber insurance, and more which we’ll discuss below.

While South Carolina may have limited compulsory policies, smart business owners go above and beyond state minimums to fully protect their company’s interests. Read on for a complete overview of recommended business insurance coverages in the state.

#1 Workers’ Compensation

• What it covers: Medical treatment, lost wages, disability benefits, death benefits, and legal costs stemming from employee injuries or illnesses incurred at work. Designed as a no-fault system to provide quick benefits without litigation.

• Who it covers: Employees injured on the job. Does not cover business owners.

• Required for: Companies with 4 or more full or part-time employees. Certain building/construction contractors and trucking companies regardless of size.

• Penalty for non-compliance: Fines up to $10,000 and imprisonment up to 1 year. Stop-work orders. Ineligibility for state contracts. Lawsuits from injured employees.

• Cost: Average $68/month per employee in South Carolina. Varies widely by industry risk and company claims history.

Workers’ compensation provides crucial protection and is mandatory for most businesses in South Carolina. Failing to carry it puts owners at major legal and financial risk.

#2 Commercial Auto Insurance

• What it covers: Bodily injury, property damage, medical payments stemming from accidents involving company vehicles. Also covers collision, theft, vandalism, and uninsured motorists.

• Who it covers: The business against liability claims. Passengers and drivers of company vehicles. Other parties injured by the business’ vehicles.

• Required for: Any business that owns vehicles driven for commercial purposes. Includes trucks, vans, cars, ATVs, trailers, and more.

• Minimum limits in SC: $25,000 per injured person, $50,000 per accident bodily injury. $25,000 for property damage.

• Penalty for non-compliance: 2 points on driving record and fines up to $500 for first offense. Subsequent violations can lead to business license revocation.

• Cost: Average of $150/month per vehicle. Varies by factors like vehicle type, industry, coverage limits, and driving records.

Any South Carolina business operating motor vehicles needs to carry commercial auto insurance. It covers both liability and physical damage and is crucial protection against potentially massive accident costs.

#3 General Liability Insurance

• What it covers: Third-party bodily injury, property damage, personal injury, medical expenses, and legal costs for which the business is deemed responsible. Defends against liability claims and lawsuits.

• Who it covers: The legal entity of the business. Not individual employees or owners.

• Required for: Not an explicit legal requirement in South Carolina but virtually mandatory for any business to cover premises and operations hazards. Often required by landlords, vendors, and clients.

• Limits: Most small businesses carry $1 million per occurrence and $2 million aggregate. Higher risk industries may opt for more.

• Cost: Approximately $44/month for $1 million coverage in South Carolina. Varies based on size, industry, revenue, and location.

• Key exclusions: Employee injuries (covered by workers’ comp), auto accidents (covered by commercial auto policy), prior damage/incidents, contractual liability.

No business owner wants their personal assets at risk in case of a lawsuit. Carrying adequate general liability insurance is the only way to shield your company from potentially ruinous legal judgments. It’s a must-have coverage.

#4 Business Owners Policy (BOP)

• What it covers: Combines general liability insurance with commercial property coverage. Some BOPs also include business interruption insurance.

• Who it covers: The legal business entity.

• Required for: Not required in South Carolina but often the most cost-effective option for small businesses to insure their physical space and third-party liabilities under one convenient policy.

• Coverage amount: General liability limits around $1 million. Property coverage for the actual cash value of the space and its contents.

• Cost: Approximately $49/month for general liability and property coverage combined in South Carolina.

• Benefits: Bundling discounts around 10-15%. Broader coverage than a standard GL policy. One deductible. Simplified purchasing and administration.

For most small storefronts, offices, restaurants and other local brick-and-mortar businesses, a BOP policy delivers essential protections at an affordable price. It covers the two most essential coverages and allows convenient one-stop management.

#5 Professional Liability Insurance

• What it covers: Financial harm and legal claims from clients alleging your professional services caused them loss or damage. Also called errors and omissions (E&O) insurance.

• Who it covers: The business entity and individual owners/employees involved in delivering professional services.

• Required for: Explicitly required for certain licensed professions in South Carolina like insurance agents, medical professionals, accountants, architects, and engineers. Implicitly crucial for any consultant, advisor, agency, or firm.

• Coverage amount: At least $1 million per claim. Larger firms often carry limits from $3-$5 million.

• Cost: For small firms, about $59/month for $1 million professional liability insurance in South Carolina. Scales up for larger companies.

• Key exclusions: Criminal acts, intentional harm, breach of contract, prior claims/incidents.

No consulting, advisory, design, or other professional services firm should operate without liability insurance covering their expertise. It protects against ruinous allegations of malpractice, negligence, and mistakes.

#6 Cyber Insurance

• What it covers: Data breaches, hacking incidents, ransomware attacks, wire fraud, identity theft, cyber extortion threats, and more digital crimes and disruptions. Pays forensic investigation costs, legal settlements/judgments, crisis management expenses, lost income from outages, and recovery of encrypted data.

• Who it covers: The business entity itself. Can add endorsements to cover individuals impacted by a breach.

• Required for: Not an explicit mandate but strongly recommended for all South Carolina businesses that collect sensitive customer information like SSNs, financial data, medical records, usernames and passwords.

• Coverage amount: From $500,000 up to $5 million or more. Depends on potential costs and liabilities specific to the business.

• Cost: For small businesses, approximately $50/month per $1 million in cyber insurance coverage. The more digital exposure, the higher the premiums.

• Key exclusions: Acts of war, prior incidents, physical asset damage, reputational harm, known security vulnerabilities unresolved by the policyholder.

Cybercrime is rampant and most small businesses are prime targets. Carrying cyber liability insurance can make the difference between surviving an attack or permanently closing shop after a breach.

#7 Commercial Property Insurance

• What it covers: Damage to physical business premises and other corporate real estate due to fire, smoke, wind, hail, vandalism, theft, and most forms of weather. Also covers inventory, equipment, furnishings, and tenant improvements/fit-outs.

• Who it covers: The business entity that owns the property.

• Required for: Not legally mandated but essential for all South Carolina businesses to protect their physical location(s) and contents.

• Coverage amount: Full replacement cost up to the covered limit. Limits based on total insured value of the space, equipment, inventory, improvements, etc.

• Cost: Depends on risk factors like industry, location, and property value. Approximately $35/month per $500k insured. Can be bundled into a BOP.

• Key exclusions: Flood, earthquake, prior damage, hazardous materials, cyber risks, neglect/vandalism by policyholder.

No prudent business can operate without insurance safeguarding their place of business, equipment, inventory, and furnishings against common risks like fire, storms, and theft. Property insurance is an absolute must-have.

Final Word on South Carolina Small Business Insurance Requirements

While South Carolina mandates only workers’ compensation and commercial auto policies, smart business owners secure added coverages for full protection of their legal, physical, digital, and financial assets.

Work closely with an independent insurance agent or broker to review exposures unique to your company’s size, industry, clients, technology use, property, payroll, vehicles and other factors. Then customize an optimal insurance portfolio.

Adequate insurance is truly the cornerstone of any thriving, sustainable South Carolina enterprise. Don’t cut corners – work with experts to implement robust policies that fully cover your company beyond basic state requirements.