I opened a location in a new state — can I use the same policy?
If you have opened a location in a new state, or are about to, your current policy can often follow for liability and property, as long as your insurer is licensed there and willing to add it. Workers' comp works differently: the new state has to be named on that policy, and that state's rules and rates apply. If the location is already open, ask your agent today to confirm each policy.
- Liability and property usually stretch to a new state if your insurer is licensed and has its prices on file there.
- Workers' comp must name the new state before anyone works there, and a few states run their own fund that private policies can't replace.
- Already open? Ask your agent today to confirm each policy. Not open yet? Start about 60 days ahead, so a "no" still leaves time to place the new state elsewhere.
Does my current policy cover the location I opened in another state?
Usually, for liability and property, if your insurer is licensed in that state and the new address has been added to the policy. The insurer then prices it under that state's filed rates.
If you are already open and your agent doesn't know, tell them first. Ask in writing which policies name the new address and state.
An insurer licensed by a state, with its rates on file there and a state safety-net fund behind it, is what the industry calls an admitted carrierAdmitted Carrier An insurance company licensed by your state, with its rates filed there and a state safety-net fund behind it if it fails. Insurers call it an admitted carrier.. Licensed insurers fund that net, and it pays claims if one fails. (Source: National Association of Insurance Commissioners) If your insurer is licensed in both states, your liability coverage and property coverage can usually carry the new location on the same policy.
If it isn't, the location may go to an insurer the state permits but doesn't license, without the safety net. Our guide to licensed versus specialty insurers explains the trade.
Why would my insurer refuse to add the new state?
Because a license alone isn't enough. The insurer also needs prices and policy wording on file in that state for your kind of business, and it may not want that state's risks.
Each state decides how insurers file their prices: some require approval first, others let the insurer file and start using a rate, and some allow filing after the fact. (Source: National Association of Insurance Commissioners) An insurer that never filed your type of business in the new state can't just add it to your policy.
A "no" usually means the insurer isn't licensed there, hasn't filed your kind of business, or dislikes that state's weather, lawsuit climate or claim costs. Your options are a second policy for the new state, or moving the whole account to an insurer licensed in both.
How does workers' comp work when you cross a state line?
State by state. Insurance that pays an injured employee's medical bills and lost wages follows the law of the state where they work, so the new state must be listed on your policy before your first hire there.
That insurance is workers' compWorkers' Compensation Insurance that pays medical bills and lost wages when an employee is hurt or sick because of work. Insurers call it workers' compensation., and the first page of your workers' comp policy holds two lists of states. The first (line 3.A) holds the states where you already have employees, and those states' laws apply in full. The second, called "other states" coverage, holds states where work might start later. Under the standard policy, if you begin work in an "other states" state midyear, it is treated as if it were on the first list, but you must tell the insurer at once. If you already have work in a state on neither list when the policy starts, there is no coverage there unless you notify the insurer in the first 30 days. (Source: National Council on Compensation Insurance standard policy)
Also, four states run their own workers' comp fund, and private insurers can't sell it there; employers buy from the state. (Source: Sentry Insurance) And every state sets its own rates and benefit rules, so the same payroll costs a different amount across a state line. The year-end payroll check, explained in what a premium audit is, sorts payroll by state.
Do my vehicles and my agent need to change?
Possibly both. Vehicles registered or kept in the new state are insured under that state's rules, and your agent needs a license in that state to place and service coverage there.
Vehicles. Nearly every state requires auto liability insurance, but the amount required varies by state. (Source: National Association of Insurance Commissioners) Tell your agent which vehicles will be registered or kept overnight in the new state; the price on your business auto policy is set by where each vehicle is kept.
Your agent. Agents are licensed state by state. An agent licensed in one state generally has to meet the separate requirements of each other state to sell there. (Source: National Association of Insurance Commissioners) Ask whether yours is licensed in the new state. If not, the account may need a second agent.
What should I do before, or right after, opening in a new state?
Tell your agent the state, address and opening date, and get a yes or no on each policy. Not open yet? Start about 60 days ahead, which leaves time to place a refusal elsewhere before the landlord, the first hire or the first delivery.
- Confirm the insurer: is it licensed and filed for your business in the new state? If not, start a second quote now.
- Add the state to workers' comp: before anyone works there, with estimated payroll and job types. The standard policy's 30-day grace applies only to work you already had when the policy started, so don't plan around it. (Source: National Council on Compensation Insurance standard policy)
- Move the vehicles: update where each vehicle is registered and kept.
- Check your agent's license in the new state.
- Send the lease: the landlord will want proof of insurance. How a new address joins the policy is covered in insuring several locations.
Common questions about opening in a new state
Not for insurance. Some owners form one for legal or tax reasons. If you do, that company has to be added to each policy as a policyholder, or it may have no coverage.
Short stints are often handled by the policy's "other states" section, but each state has its own rules on when its law applies. Tell your agent before anyone works there regularly.
Yes. The new location adds its own sales, payroll and property values, and workers' comp and auto are priced on the new state's rates, which can be higher or lower than your home state's.
Crossing a state line? Check every policy before you open.
Tell us the state, the address and the opening date, and we'll check which of your policies can follow you and what has to be placed new.