If you're running a business in New York, here's something that might surprise you: the Empire State has some of the strictest—and most expensive—business insurance requirements in the country. New York doesn't just require workers' compensation insurance; it also mandates something called Disability Benefits Law (DBL) coverage that most other states don't have. And those workers' comp rates? They're about 69% higher than the national median, making New York the 4th most expensive state for this coverage.
But before you panic, there's good news: recent rate decreases in 2024 and 2025 are saving New York businesses millions of dollars collectively. Plus, once you understand what's actually required and why these coverages exist, getting properly insured becomes a lot less overwhelming. Let's break down exactly what you need to know about protecting your New York business.
Workers' Compensation: New York's Strictest Requirement
Here's what catches most new business owners off guard: in New York, you need workers' compensation insurance the moment you hire your first employee. There's no grace period, no minimum employee count—if someone works for you in New York for at least 30 days in any calendar year, you're required to carry this coverage. Period.
Workers' comp covers your employees if they get injured or sick because of their job. It pays their medical bills and replaces a portion of their lost wages while they recover. In 2024, injured workers in New York receive up to two-thirds of their average weekly wage, with a minimum of $275 per week and a maximum of $1,145.43 per week. This means the coverage actually provides meaningful financial protection for your team.
Now let's talk about the elephant in the room: the cost. New York businesses pay an average of $85 per month or about $1,025 annually for workers' comp coverage. But that's just an average—your actual premium depends heavily on what industry you're in. If you're a speech therapist, you might pay as little as $7 per month. Running a roofing company? You could be looking at $970 per month. The difference comes down to risk: some jobs are simply more dangerous than others.
Your premium is calculated using a straightforward formula: take your annual employee payroll, divide by 100, then multiply by your industry rate. So if you have $200,000 in annual payroll and your industry rate is $2.50, you'd pay about $5,000 annually. The good news is that 2025 brought a significant rate decrease of 13.2% in loss costs, and assessment rates dropped from 9.2% in 2024 to 7.1% in 2025—that's a 22% reduction translating to approximately $191 million in collective savings for New York businesses.
Disability Benefits Law (DBL): New York's Unique Requirement
This is where New York really stands apart from most other states. DBL coverage is mandatory if you have at least one employee working in New York on each of at least 30 days in any calendar year. Unlike workers' comp, which only covers work-related injuries, DBL provides cash benefits when your employees get injured or sick off the job.
Think of it this way: if your employee breaks their leg skiing on vacation, workers' comp won't help them—but DBL will. The coverage kicks in after seven consecutive days out of work and provides 50% of the employee's average wages (calculated over the prior eight weeks) up to a maximum of $170 per week for up to 26 weeks. It's not generous, but it's something.
For 2024, the taxable wage base is capped at $89,343.80, and employees contribute through payroll deductions of up to $31.20 annually (or 0.5% of wages up to $0.60 weekly). Full-time employees become eligible after four weeks of consecutive employment, while part-time employees qualify after their 25th day of work. Recent updates in 2024 expanded coverage to include organ donation as a qualifying reason for leave, and pregnancy-related disability is now presumed for at least four weeks prior to the due date and six to eight weeks after birth.
You have three options for providing DBL coverage: work with the New York State Insurance Fund, purchase a policy from a private insurance carrier, or self-fund your own program with state approval. Most small businesses go with a private carrier since it's simpler and often bundled with workers' comp policies.
Other Essential Business Insurance Coverage
While workers' comp and DBL are legally required, they're not the only insurance you need. General liability insurance isn't mandated by New York state law, but it's practically essential—and often required by landlords, clients, or lenders before they'll work with you. This coverage protects you if someone gets hurt on your business property or if you accidentally damage someone else's property during your work.
Professional liability insurance (also called errors and omissions insurance) is crucial if you provide professional services or advice. If a client claims your work caused them financial harm—even if the claim is baseless—this coverage pays for your legal defense and any settlement or judgment. For consultants, accountants, lawyers, architects, and similar professionals, this isn't optional.
Commercial auto insurance is required if your business owns vehicles or if employees drive their personal vehicles for work purposes. And if you have a physical location with equipment, inventory, or important documents, commercial property insurance protects those assets from fire, theft, or natural disasters.
One major development in 2024 makes business interruption insurance more accessible. Governor Hochul signed legislation authorizing stand-alone business interruption policies that don't require physical damage to trigger coverage. This addresses a critical gap exposed during COVID-19, when many businesses lost income but couldn't file claims because there was no physical damage to their property. Now you can purchase coverage that protects you from business losses during future pandemics, active shooter threats, or other events that shut down your operations without damaging your building.
Getting Started: Your Action Plan
First, don't wait until the last minute. New York takes workers' comp and DBL compliance seriously, and operating without required coverage can result in hefty fines and even criminal charges. Get these policies in place before your first employee starts work.
Start by getting quotes from multiple insurance carriers. Rates can vary significantly between companies, especially for workers' comp. Be prepared to provide detailed information about your business: your industry classification code, annual payroll, number of employees, and specific job duties. The more accurate this information is, the more accurate your quotes will be.
Consider working with an independent insurance agent who specializes in business insurance. They can help you navigate New York's complex requirements, compare policies from multiple carriers, and often bundle coverage for better rates. Many businesses find that purchasing a Business Owner's Policy (BOP) that bundles general liability and commercial property coverage is more cost-effective than buying separate policies.
Once you have coverage, keep your policies current and review them annually. As your business grows and changes, your insurance needs will evolve too. Adding new employees, expanding into new services, or moving to a new location can all affect your coverage requirements and costs. Regular reviews ensure you're neither underinsured nor overpaying for coverage you don't need.
Yes, New York's business insurance requirements are stricter and more expensive than most states. But they exist for good reasons: protecting your employees when they get hurt and protecting your business from devastating financial losses. With recent rate decreases and new coverage options like stand-alone business interruption insurance, the landscape is actually improving for New York business owners. Take the time to get it right from the start, and you'll have peace of mind knowing your business and your team are properly protected.
