North Dakota Business Insurance 

If you are starting or running a business in North Dakota, one of the first questions you will face is simple: what business insurance do you actually need?

Some of it is required by law. Workers’ compensation insurance is required for nearly every employer, and in North Dakota workers compensation coverage comes only from the state¹.

Auto insurance is required on every registered vehicle, including business vehicles². The North Dakota Insurance Department states general liability insurance is not required of every business statewide, but a contractor license, a lease, a lender, or a customer contract can require it. What else you need depends on the work you do, the property you own, and the people you employ. 

North Dakota also works differently than most states in one way that costs owners real money. Workers’ compensation comes from a state agency called Workforce Safety & Insurance, or WSI, and no private company is allowed to sell it here. Your other coverage comes from the private market. The two do not overlap, and there is a gap where they meet. 

At Gild Insurance, we help North Dakota business owners understand what the state requires and what their contracts require. Then we help them find the coverages that fit the way they actually work. 

Is Business Insurance Required in North Dakota? 

Yes, some business insurance policies are required, and the rest depends on your situation. 

North Dakota requires workers’ compensation insurance for nearly every employer. It requires insurance on every registered vehicle. There is no broad state law that requires general liability insurance of every business. The North Dakota Insurance Department says this plainly, and it also notes that the requirement reaches you through other doors. The Secretary of State, for example, requires a contractor to show proof of insurance before doing business. 

Your license, your lease, your lender, and your customer contracts will often require liability coverage even when state law does not. 

The Insurance Department makes one point that is worth reading twice. Businesses that carry no liability coverage sometimes describe themselves as self-insured. The Department’s response is that the accurate word is uninsured, and that uninsured businesses put all of their assets at risk. 

Workers’ Compensation Insurance Comes From the State 

If you hire even one person, you need workers’ compensation before that person starts work. Coverage is required from the first day and first dollar of employment, according to the North Dakota Insurance Department. It covers full-time, part-time, seasonal, and occasional workers alike. You cannot deduct any part of the premium from a worker’s pay, and no employee can sign away their rights under Title 65. 

You cannot shop this coverage, and neither can we. In North Dakota, workers’ compensation insurance comes only from the department of Workforce Safety and Insurance , which is an exclusive employer-financed, no-fault system. State law does not allow private insurers to underwrite it here. For many owners this is a relief. There is one application and one place to go. 

The part that surprises people is what the policy leaves out. 

The Coverage a Workforce Safety Policy Does Not Include 

A workers’ compensation insurance policy issued through the State of North Dakota pays your injured worker. It does not defend you if that worker sues you over the injury. 

That protection is a different coverage, called employer’s liability. It applies to claims from a work-related injury that workers’ compensation does not cover. In North Dakota, the Insurance Department notes that this coverage is generally written as an endorsement to your general liability insurance policy. This is often called a stop gap coverage, because it closes the gap the state fund leaves open. 

In most states, this protection is built into the workers’ compensation policy, so you may never have to think about it separately. In North Dakota, that is not always the case.

If your workers’ compensation coverage is issued through North Dakota Workforce Safety and Insurance and you also carry a separate general liability policy, this protection may need to be added by endorsement.

What Happens If You Do Not Have North Dakota State Coverage 

Operating without required North Dakota workers’ compensation coverage can trigger immediate penalties, stop-work action, and direct financial liability for workplace injuries.

The State can issue a Cease and Desist Order against an uninsured employer, which stops your operation. You face a penalty of $10,000 plus $100 for every day the violation continues. You are liable for the actual cost and reserves of any claim from the period you were uninsured. And your workers may sue you directly for damages caused by an injury during that time, under N.D.C.C. 65-04-33.  

That last consequence is the one to understand. Workers’ compensation insurance normally trades your employee’s right to sue you for guaranteed benefits. If you go uninsured, you lose your side of that trade and keep none of the protection. 

Contractors carry a second exposure. Suppose you willfully use a subcontractor that is operating under a cease and desist order. You face a penalty of $5,000 plus $100 per day, under N.D.C.C. 65-04-27.2. Checking a subcontractor’s WSI status is not a formality. It is a cost you can avoid. 

Who Counts as an Employee in North Dakota?

North Dakota starts with a broad presumption: if someone performs services for your business in exchange for pay, the state generally treats that person as your employee.

The only way around that is proving independent contractor status under the common law test. The burden of proof falls on the person claiming it rather than on Department of Workforce Safety.

A favorable determination does not last forever. It is effective for no more than one year from the date of notice. The Department of Workforce Safety also keeps continuing jurisdiction to reconsider or revoke it at any time. A classification you settled two years ago is not settled today. 

Owners, partners, corporate officers, and their spouses are not covered automatically. You may purchase elective coverage for yourself and for any otherwise exempt worker, and that coverage is not required by law. Federal and railroad employees are the exception³. 

Family employment has an age line worth knowing. Coverage for your children younger than 22 is elective. Once a child turns 22, coverage becomes mandatory. If you are unsure where you stand, confirm it with the Department of Workforce Safety rather than assuming. 

Out-of-state employers are drawn in more often than they expect. If you come into North Dakota and hire workers here for work here, coverage is required. WSI also applies significant-contact tests. One asks whether an employee earns 25 percent or more of their gross annual wage from you for services in North Dakota. The other asks whether 25 percent of your gross annual payroll is payable for services in the state⁴.

Commercial Auto Insurance in North Dakota 

Commercial auto insurance in North Dakota works differently than in many states because North Dakota uses a no-fault system for covered auto losses.Your own basic no-fault coverage pays your economic losses, such as medical expenses and work loss, without regard to who caused the accident. Under North Dakota law, your auto’s no-fault coverage is primary regardless of fault⁵. 

North Dakota Commercial Auto Insurance Minimums

Every registered vehicle must carry minimum coverage. The Insurance Department is explicit that this requirement applies to commercial and business automobiles as well as personal autos. For private passenger type vehicles, including pickups and vans, the minimums are: 

• $25,000 of bodily injury liability per person and $50,000 per accident 

• $25,000 of property damage liability per accident 

• $25,000 per person and $50,000 per accident of uninsured and underinsured motorist coverage 

• $30,000 of basic no-fault coverage per person 

Special Rules for Commercial Vehicles

Two rules apply specifically to commercial vehicles, and both come from the state. 

The North Dakota Insurance Department states commercial vehicles weighing more than 20,000 pounds are not required to carry uninsured and underinsured motorist coverage. This is a legal exemption rather than a recommendation. Every other vehicle in the state must carry that protection, so dropping it on your heaviest trucks is a decision worth making deliberately. 

Commercial vehicles used to haul for hire may be subject to the Federal Motor Carriers Act of 1980. Depending on the cargo, the required amount of insurance ranges from $750,000 to $5,000,000. Hazardous cargo requires higher limits, according to The North Dakota Insurance Department That is a long way from the $25,000 state minimum. If you haul for hire, confirm which rule applies to your operation before you rely on a state-minimum policy. 

One more point catches owners who use their own vehicles for work. The North Dakota Insurance Department states private passenger automobile policies contain an exclusion for business use, and typically there is no coverage for an accident that happens during business use. If you or your employees run errands in personal trucks, hired and non-owned auto coverage is how that exposure is handled. 

Contractor Licensing and Proof of Insurance 

When the cost, value, or price of a job exceeds $4,000, the person doing the work must be licensed as a contractor in North Dakota. The requirement comes from N.D.C.C. ch. 43-07, and it applies to subcontractors, general contractors, public contractors, and nonresident contractors alike⁶.

The insurance requirements are specific. 

Your application must include a certificate of general liability insurance, and the insurance must be in the same name you are requesting for the license. The certificate must list the North Dakota Secretary of State, 600 E Boulevard Ave, Dept 108, Bismarck, ND 58505, as the certificate holder⁷. 

If you have employees residing in North Dakota, you also need a current certificate of payment from the Department of Workforce Safety. If you have no employees residing in North Dakota, and you do not meet the tests of significant contact, you need a letter of good standing instead, according to the North Dakota Secretary of State. 

North Dakota Contractor License Classes and Renewal Requirements

Your contractor license class is set by the size of your largest contract per job, not by your revenue: 

• Class A, over $500,000 per job 

• Class B, up to $500,000 per job 

• Class C, up to $300,000 per job 

• Class D, up to $100,000 per job 

Renewal is due on or before March 1 each year, and three things come with it. You must list each project, contract, or subcontract you completed in North Dakota during the preceding calendar year that exceeded $50,000. You must certify that your payroll taxes, Workforce Safety and Insurance premiums, and unemployment insurance premiums have been paid. The North Dakota Secretary of State states you must provide a certificate of insurance verifying your coverage. 

That last requirement connects two things that owners often treat separately. Your contractor license renewal depends on your Department of Workforce Safety account being current. In North Dakota, your insurance and your license are one obligation, not two. 

Other businesses meet insurance requirements through licensing as well. Restaurants, salons, liquor stores, and bed and breakfasts all face licensing requirements from various city and state agencies, according to the North Dakota Insurance Department.

How Fault Works in a General Liability Claim

If someone claims your business caused bodily injury or property damage, North Dakota can divide fault among everyone who contributed to the loss⁸. This often matters in a general liability insurance claim, such as a customer injury, damage to a client’s property, or another accident tied to your business operations.

Your recovery is reduced by your percentage of fault. If your share of the fault is equal to or greater than the combined fault of everyone else involved, you generally cannot recover damages.

For example, if you are 40 percent at fault, you may still recover 60 percent of your damages. If you are 50 percent at fault and everyone else together is also 50 percent at fault, you generally cannot recover.

General liability insurance can also help with the cost of defending a covered lawsuit. That matters because legal expenses can start building long before fault is finally decided.

Types of Business Insurance North Dakota Owners Buy 

The business insurance North Dakota owners need usually combines several policies, each designed to protect against a different type of risk.

General Liability Insurance

A customer slips on the entryway of your Minot storefront in February and is injured. That is a general liability claim, and the Insurance Department uses a failure to clear an icy entryway as its own example. A general liability insurance policy responds to third-party bodily injury, property damage, and personal and advertising injury. It pays medical expenses, the cost of defending lawsuits, bonds during legal proceedings, and judgments. Medical payments coverage is included, generally between $1,000 and $10,000, and it pays a minor third-party injury without any finding of negligence, according to the Insurance Department. 

Business Owner’s Policy

For a Jamestown print shop or a Mandan retailer, this bundles general liability and commercial property with a number of supporting coverages. Because most of what a business needs is included automatically, it prevents gaps and reduces cost by spreading risk across all policyholders. The Insurance Department states that a business owners’s policy is the alternative when your operation is unusual or does not qualify. Neither one includes workers’ compensation, because in North Dakota no private policy can. 

Commercial Property and Business Income

A pipe freezes and breaks in a Devils Lake building in January, and the water reaches your inventory. Whether the loss is covered depends on your form. A basic or broad form pays only for the causes of loss it names. The Insurance Department states a special form covers all perils except those specifically excluded, and it is the broadest form you can buy. Business income coverage then replaces the revenue you lose while the space is repaired. Equipment breakdown covers the boiler that cracked and the income lost behind it. 

Professional Liability Insurance

Grand Forks has built an unmanned aircraft industry, and a drone services company that delivers a flawed survey has a problem that no liability policy will answer. Professional liability, also called errors and omissions, covers physical and financial injury caused by a service you provided or failed to provide in a professional capacity. The Insurance Department’s examples range from architects and engineers to accountants and realtors. The claim is about your work, not about your premises. 

Products and Completed Operations Liability

A Dickinson fabrication shop ships a part that fails in the field. General liability will not respond to it. The Insurance Department is direct that injury caused by a product you manufactured is not covered by a general liability policy or a business owner’s policy. That requires products and completed operations coverage, and it applies to manufacturers, sellers, and wholesalers. 

Inland Marine Insurance

North Dakota is a large state, and a service crew driving from Williston to a site outside Watford City keeps its most valuable property in the truck rather than in a building. Inland marine covers property that is not permanently attached to a building, including tools, stock, displays, and equipment used away from your premises, and it normally provides all-perils coverage wherever that property is located, according to The Insurance Department Review the coverage territory, the valuation, and the unattended vehicle conditions before you need it. 

Cyber Liability Insurance

A Fargo company that stores customer payment information is one bad click away from a notification obligation. Cyber liability pays for claims involving theft, destruction, or unauthorized use of electronic data, and for failing to safeguard another party’s data. The Insurance Department states it reaches unauthorized access, viruses, attacks on covered systems, extortion, loss of income from an online interruption, and the cost of investigating the cause.

North Dakota gives that last coverage real weight. Under N.D.C.C. ch. 51-30, you must notify affected residents in the most expedient time possible and without unreasonable delay. There is no fixed number of days, which is unusual among states. If a breach affects more than 250 individuals, you must also notify the Attorney General. Encrypted data is a safe harbor, because the statute reaches unencrypted personal information. The Attorney General enforces the chapter and civil penalties are available⁹. 

Depending on how your business operates, you may also need coverage for risks that fall outside the core policies above:

• Employment practices liability: covers claims of wrongful termination, discrimination, and harassment, and it is specifically excluded from both general liability and workers’ compensation policies.
• Umbrella insurance: provides higher limits above your underlying policies.
• Crime coverage: addresses employee dishonesty, theft of money and securities, and forgery.
• Builders risk: covers buildings during construction.
• Garagekeepers coverage: designed for businesses that take possession of a customer’s vehicle for repair or storage.¹⁰

North Dakota Conditions That Affect Your Coverage 

Where and how you operate in North Dakota can change the risks your business faces and the coverage you may need. Winter weather is one of the biggest factors to plan for.

Winter Weather and Business Insurance

Winter is a business condition here, not a season you wait out. The North Dakota winter season usually begins in late November and continues until late March. On average, the state experiences three to four severe winter storms each year. Heavy snow paralyzes transportation and strands vehicles. Ice storms topple utility lines and poles and make travel virtually impossible¹¹. 

That is four months of your calendar every year, and it should shape your policy decisions. 

Your business income limit and restoration period matter more when a storm can close roads for days. Utility service interruption coverage responds to a power loss that begins somewhere else. Equipment breakdown covers the heating system that fails in January, along with the income lost behind it, according to The Insurance Department. Spoilage protects inventory that cannot survive an outage. Commercial auto physical damage covers the vehicle in the ditch. Inland marine follows the tools that were in the truck when it happened. 

Flood and Earthquake Coverage

Two exclusions are worth understanding before a claim explains them to you. Standard commercial property policies do not cover damage caused by flood. The primary source for flood insurance is the National Flood Insurance Program, which is a federal program. Perhaps your building sits near the Red River, near a drainage area, or anywhere snowmelt collects. Do not assume a business owner’s policy will respond. Earthquake damage is also excluded from commercial property and requires an endorsement or a separate policy, according to The Insurance Department. 

The cause of loss decides these claims. Surface water, sewer backup, sump overflow, and water entering through a storm-damaged roof are four different questions with four different answers. 

Insurance for Home-Based Businesses

If you run your business from home, understand that a homeowners policy specifically excludes liability coverage for business operations. This is not a gray area. Many companies will add business liability by endorsement for lower-risk operations. A homeowners policy may also cover a very limited amount of business property, but that generally means property you brought home from a job. It does not cover inventory held for sale according to The Insurance Department.  Covering real inventory requires a commercial policy. 

How Much Does North Dakota Business Insurance Cost? 

The cost of North Dakota business insurance varies widely because premiums are based on the type of business, its size, and the coverage selected.

Many small businesses may pay between $20 and $100 per month for basic coverage. Actual premiums depend on the operation and policies selected. 

Treat that as a starting point rather than a quote. Consider a consultant working from a leased office in Fargo. Now consider a service contractor in Williston with employees, trucks, and tools. They do not belong in the same pricing conversation, and no monthly range describes both of them honestly. 

Premiums depend on your industry and the risk level of your work. They also depend on your claims history and the frequency and severity of past losses. Your revenue and payroll matter, along with your property and equipment values, your vehicles and drivers, and the limits and deductibles you select. 

The Insurance Department names two factors that owners tend to underestimate. New businesses generally pay more, because no track record is treated as higher risk. The Insurance Department states most commercial rating programs carry minimum premium requirements, which makes coverage feel expensive against a first year’s income until the operation grows. 

Workforce Safety policy premiums and commercial auto insurance are priced separately from a basic liability or business owner’s policy estimate. When you compare options, compare matching coverages and limits rather than price alone. 

You can influence the number. Discounts generally follow prevention, including fire extinguishers, sprinklers, and employee training programs. A higher deductible lowers your premium. If you are considering reducing property limits, review your coinsurance and replacement cost requirements first, according to The Insurance Department.

How to Choose Business Insurance in North Dakota 

The business insurance North Dakota owners need comes out of how they operate. Two examples show how far apart the answers land. 

A contractor in Williston with six employees and four trucks begins with workers compensation insurance coverage, because the obligation arrived with the first hire. Next comes the stop gap endorsement, since a Workforce Safety policy will not defend him. Next is commercial auto insurance, where his heaviest trucks sit above the 20,000 pound line and the uninsured motorist decision becomes his to make. Then add inland marine insurance, because tools can travel.

A consultant in Fargo working from a leased office starts in a different place entirely. With no employees, there is no Workforce Safety workers compensation obligation. The exposures link to professional liability insurance and the cyber risks related to client data on her laptop, and a landlord’s certificate requirement for general liability insurance.

Same state, same page, very little overlap. The order below works for both of them. 

• List every operation. Include side services, delivery, installation, online sales, work at customer locations, and seasonal activity. 

• Identify your requirements. workers’ compensation, vehicle rules, your license class, leases, financing agreements, and customer contracts each require something different. 

• Inventory what a bad day costs. Include buildings, tenant improvements, equipment, tools, stock, data, and the income you lose while you are closed. 

• Separate your liability exposures. Physical injury, professional mistakes, employee claims, cyber events, and vehicle accidents require five different coverages. 

• Review the details. Confirm your deductibles, additional insured requirements, off-premises property coverage, business income restoration period, and whether your employer’s liability endorsement is actually on the policy. 

Revisit all of it when you hire, buy a vehicle, add a location, sign a large contract, change your services, or increase your property values. Insurance that fit your business two years ago may not fit it today. 

Get North Dakota Business Insurance That Fits Your Business 

No two North Dakota businesses need the same policy. We look at how your business actually operates, including your employees, your property, your vehicles, your contracts, and the work you do every day. We help you separate what the state requires from what your contracts require, and from what simply protects what you have built. 

Gild will work for you rather than for a carrier, and we place coverage across more than 40 of them. 

Tell us what your business does. We will help you find coverage that fits, without making the process harder than it needs to be. 

Get a quote online or schedule time with a Gild agent to build a policy that protects what you’ve worked hard to grow.

Sources

1. https://www.workforcesafety.com/employers/insurance-coverage-information/coverage-requirements ↩︎
2. https://www.insurance.nd.gov/consumers/insurance/business ↩︎
3. https://www.workforcesafety.com/employers/insurance-coverage-information/coverage-types ↩︎
4. https://www.workforcesafety.com/employers/common-questions ↩︎
5. https://www.insurance.nd.gov/consumers/insurance/auto ↩︎
6. https://ndlegis.gov/cencode/t43c07.pdf ↩︎
7. https://www.sos.nd.gov/business/licensing-registration/contractors  ↩︎
8. https://ndlegis.gov/cencode/t32c03-2.pdf ↩︎
9. https://ndlegis.gov/cencode/t51c30.pdf ↩︎
10. https://www.insurance.nd.gov/consumers/insurance/business  ↩︎
11. https://ndresponse.gov/severe-winter-weather  ↩︎