Complete guide to business insurance in Pennsylvania. Understand the unique choice no-fault auto system, workers' comp requirements, Philadelphia vs. Pittsburgh considerations, and state-specific coverage needs.

Pennsylvania Business Insurance Guide: Choice No-Fault, Workers’ Comp, and Keystone State Requirements

Pennsylvania offers a unique blend of urban sophistication and rural economy, with two major metro areas presenting distinct insurance challenges. The state’s innovative choice no-fault auto system and comprehensive workers’ compensation requirements create a distinctive insurance landscape for Keystone State businesses.

Pennsylvania Insurance Requirements at a Glance

Coverage Type	Required?	Minimum Limits	Notes
Workers’ Compensation	Yes (with employees)	Statutory	Very limited exemptions
Commercial Auto	Yes (business vehicles)	15/30/5	Choice no-fault state
General Liability	No	N/A	Required by most contracts
Unemployment Compensation	Yes	State rates	All employers
Professional Liability	Varies	Varies	Required for some professions

Pennsylvania’s Unique Auto Insurance System

Pennsylvania has a “choice no-fault” system unlike any other state, giving drivers options that affect both premium costs and legal rights.

The Tort Options

When purchasing auto insurance in Pennsylvania, you must choose:

Limited Tort:

Lower premiums (typically 15-25% less)
Can recover for medical bills and lost wages
Cannot sue for pain and suffering except for “serious injury”
Serious injury = death, serious impairment of body function, permanent serious disfigurement

Full Tort:

Higher premiums
Maintains full right to sue
Can recover pain and suffering for any injury
No threshold requirement

Business Implications

Consideration	Limited Tort	Full Tort
Premium cost	Lower	Higher
Employee coverage	Employees bound by company choice	Full rights preserved
Liability exposure	Limited	Standard
Recommended for	Cost-conscious, low-risk	Commercial fleets, high employee use

Important for employers: Your tort choice affects employees driving company vehicles. Many businesses choose full tort to provide employees full legal rights.

Required Auto Coverage

Coverage Type	Minimum Required	Recommended
Bodily Injury (per person)	$15,000	$100,000+
Bodily Injury (per accident)	$30,000	$300,000+
Property Damage	$5,000	$100,000+
Medical Benefits	$5,000	$25,000+
First Party Benefits	Required	Various options

First Party Benefits

Pennsylvania requires insurers to offer these optional coverages:

Income loss benefits - Up to $2,500/month
Accidental death benefit - $25,000 default
Funeral benefit - $2,500 default
Extraordinary medical benefits - Up to $1.1 million additional

Commercial Auto Considerations

Minimum limits are dangerously low - $100,000/$300,000+ recommended
Full tort recommended - Protects employee rights
Hired and non-owned - Cover personal vehicle business use
Stacking - PA allows UM/UIM stacking (multiplies coverage)

Workers’ Compensation in Pennsylvania

Pennsylvania has a well-established workers’ compensation system with mandatory coverage for most employers.

Requirements

Mandatory for employers - With limited exceptions
Construction industry - Especially strict requirements
Subcontractor coverage - Contractors liable for uninsured subs
Penalties - Criminal and civil penalties for non-compliance

Exemptions

Limited exemptions exist:

Category	Exemption Status
Sole proprietors (no employees)	Exempt
General partners	May elect out
LLC members	Depends on structure
Executive officers	Up to 4 may elect out
Agricultural workers	Partial exemption
Domestic workers	Partial exemption
Casual employees	Generally exempt

Workers’ Comp Costs

Pennsylvania workers’ comp costs are moderate:

Industry Classification	Rate per $100 Payroll	Example: $500K Payroll
Clerical/Office	$0.20 - $0.45	$1,000 - $2,250
Retail	$0.90 - $1.75	$4,500 - $8,750
Restaurant	$1.75 - $3.00	$8,750 - $15,000
Construction (General)	$6.00 - $12.00	$30,000 - $60,000
Roofing	$20.00 - $32.00	$100,000 - $160,000

Pennsylvania vs. Neighboring States

State	Average WC Rate	vs. PA
Pennsylvania	$1.32/$100	Baseline
New York	$1.89/$100	+43%
New Jersey	$1.55/$100	+17%
Ohio	$0.97/$100	-27%
Maryland	$1.15/$100	-13%

State Workers’ Insurance Fund (SWIF)

Pennsylvania has a state fund providing workers’ comp coverage:

Guaranteed acceptance - Insurer of last resort
Competitive rates - Often comparable to private market
All industries - Serves any Pennsylvania employer
Online services - Policy management and claims

Contact: PA State Workers’ Insurance Fund (opens in new tab) - (570) 963-4635

Workers’ Comp Cost Reduction Strategies

Workplace Safety Committee - 5% certified discount
Drug-Free Workplace - Additional discount possible
Experience modifier - Critical to manage claims
Return-to-work programs - Reduces claim severity
Safety groups - Industry group programs available
Classification review - Ensure accurate job classifications

Philadelphia vs. Pittsburgh: Regional Differences

Pennsylvania’s two major metros have distinct insurance characteristics.

Cost Comparison

Coverage Type	Philadelphia	Pittsburgh	Rural PA
Workers’ Comp	+25-40%	+15-25%	Baseline
General Liability	+30-45%	+10-20%	Baseline
Commercial Auto	+50-70%	+20-35%	Baseline
Property	+15-25%	+5-15%	Baseline

Philadelphia Considerations

Higher costs due to:

Population density
Traffic congestion
Higher medical costs
Litigation frequency
Property values

Special requirements:

Philadelphia Wage Tax implications
City-specific contractor requirements
Commercial Activity License insurance requirements
Higher liability limits typically required

Industries concentrated in Philadelphia:

Healthcare and pharmaceuticals
Financial services
Higher education
Professional services

Pittsburgh Considerations

Moderate cost factors:

Lower population density than Philly
Growing tech sector
Healthcare industry presence
Manufacturing legacy

Regional exposures:

Mine subsidence (some areas)
Industrial pollution history
River flooding exposure
Winter weather claims

Industries concentrated in Pittsburgh:

Healthcare and medical research
Technology and robotics
Energy (traditional and clean)
Manufacturing

Construction Industry Requirements

Pennsylvania has specific requirements for the construction industry.

Contractor Requirements

Requirement	Details
Workers’ Compensation	Mandatory for all contractors
Subcontractor Coverage	Responsible for uninsured subs
Certificate Requirements	Most projects require proof of coverage
Licensing	Varies by municipality

Commercial Project Insurance Requirements

Typical requirements for Pennsylvania commercial construction:

Coverage	Common Requirement
General Liability	$1M/$2M minimum
Workers’ Compensation	Statutory
Auto Liability	$1M CSL
Umbrella	$2M-$10M+
Professional Liability	For design-build
Builder’s Risk	Project-specific

Contractor Liability

Pennsylvania law holds contractors liable for:

Uninsured subcontractor injuries
Defective workmanship
Project site safety
Subcontractor compliance

Professional Liability Requirements

Professions with Insurance Requirements

Profession	Requirement	Typical Limits
Attorneys	Not required, strongly recommended	$100K-$1M+
Physicians	Required for hospital privileges	$500K-$1M+
Design Professionals	Often required by contract	$1M minimum
Real Estate Brokers	E&O recommended	$250K-$500K
Insurance Agents	E&O typically required	$500K-$1M
Accountants/CPAs	Strongly recommended	$500K-$1M

Medical Malpractice

Pennsylvania’s medical malpractice environment:

Factor	Pennsylvania Status
CAT Fund	Medical Care Availability and Reduction of Error Fund
Certificate of Merit	Required for filing
Venue Rules	Reformed to limit forum shopping
Damage Caps	No caps on damages
Joint and Several	Modified

CAT Fund: Pennsylvania’s unique Medical Care Availability and Reduction of Error (MCARE) Fund provides excess coverage above basic limits:

Physicians pay base premium + MCARE assessment
Fund provides excess coverage up to $500,000
Total coverage typically $500,000 primary + $500,000 MCARE = $1M

Property Insurance Considerations

Natural Hazard Exposure

Hazard	Exposure Level	Geographic Focus
Winter storms	High	Statewide
Flooding	Moderate-High	River valleys, urban areas
Wind/hail	Moderate	Statewide
Mine subsidence	Moderate	Western PA, coal regions
Sinkholes	Low-Moderate	Southeastern PA (karst terrain)

Flood Insurance

Pennsylvania has significant flood exposure:

High-risk areas:

Susquehanna River valley
Delaware River communities
Pittsburgh’s three rivers
Numerous creek and stream corridors

Coverage requirements:

NFIP available in participating communities
Private flood options expanding
Required if in SFHA with federally-backed mortgage

Mine Subsidence

Western Pennsylvania and coal regions have mine subsidence exposure:

Not covered by standard property policies
Mine Subsidence Insurance Fund - State program
Coverage limits - Up to $500,000 for residential
Commercial coverage - Available through private market

Contact: PA Mine Subsidence Insurance (opens in new tab) - (717) 783-2692

Cyber Liability in Pennsylvania

Pennsylvania Breach Notification

The Breach of Personal Information Notification Act requires:

Notification to PA residents affected by breach
Notice to Attorney General for breaches affecting 1,000+ residents
Reasonable security measures

Pennsylvania Data Privacy Developments

No comprehensive privacy law yet - Unlike California
Industry-specific requirements - Healthcare, financial services
Monitoring developments - Privacy legislation proposed

Recommended Cyber Coverage

Business Type	Recommended Limit
Small business	$100,000 - $500,000
Professional services	$500,000 - $2M
Healthcare	$1M - $5M
Financial services	$2M - $10M
Large enterprises	$10M+

Cost Factors in Pennsylvania

Regional Cost Variations

Factor	Impact
Philadelphia operations	+40-70% vs. rural
Pittsburgh operations	+15-35% vs. rural
Industry type	Significant variation
Claims history	+/- 25% or more
Building age	Older buildings cost more

Average Business Insurance Costs

Coverage Type	PA Average	National Average	Difference
General Liability	$800	$750	+7%
Workers’ Comp	$1.32/$100	$1.50/$100	-12%
Commercial Auto	$2,000	$1,800	+11%
BOP	$1,600	$1,500	+7%

Finding Coverage in Pennsylvania

Major Carriers

Workers’ Compensation:

State Workers’ Insurance Fund (SWIF)
Travelers
The Hartford
Liberty Mutual
PMA Insurance Group
AmTrust

Commercial Package:

Erie Insurance (headquartered in Erie, PA)
Travelers
The Hartford
Nationwide
Cincinnati Insurance
Westfield

Regional Carriers:

Erie Insurance (Erie, PA)
Penn National Insurance (Harrisburg)
Harleysville (now part of Nationwide)

Pennsylvania-Based Carriers

Several major carriers are headquartered in Pennsylvania:

Erie Insurance - Erie, PA
Penn National Insurance - Harrisburg
Highmark - Pittsburgh (health insurance)

These carriers often provide excellent local service and competitive rates for PA businesses.

Regulatory Resources

Pennsylvania Insurance Department

Website: insurance.pa.gov (opens in new tab)
Consumer Services: (877) 881-6388
Company/Agent Search: Online verification
Complaints: File online or by phone
Rate Information: Available online

Bureau of Workers’ Compensation

Website: dli.pa.gov/Businesses/Compensation (opens in new tab)
Employer Hotline: (717) 772-4447
Coverage Verification: Online database (WCAIS)
Self-Insurance: Application process

Other Resources

PennDOT: Commercial vehicle requirements
L&I: Labor and Industry regulations
OSHA Region 3: Federal workplace safety

Compliance Checklist for Pennsylvania Employers

Required Coverage

Workers’ Compensation (if employees)
Commercial Auto (if business vehicles)
Unemployment Compensation
Select tort option for auto coverage

Decisions to Make

Limited tort vs. full tort (auto)
First party benefits levels (auto)
Corporate officer exemptions (if applicable)
Stacking options for UM/UIM

Required Postings

Workers’ comp notice
OSHA poster
Minimum wage poster
Equal opportunity poster
Unemployment compensation notice

Annual Requirements

Workers’ comp premium audit
Unemployment compensation filings
Policy renewals and coverage reviews
Safety committee documentation (if applicable)

Key Takeaways for Pennsylvania Businesses

Understand the tort choice - Full tort recommended for commercial fleets
Workers’ comp is mandatory - Few exemptions, real penalties
Philadelphia costs significantly more - Budget 40-70% higher
SWIF is a solid option - State fund often competitive
Construction has special rules - Contractor liability for subs
Flood coverage is separate - Many PA communities have flood risk
Mine subsidence - Consider in western PA and coal regions
Regional carriers are strong - Erie and Penn National worth checking
Safety committees earn discounts - 5% certified discount available

Pennsylvania’s insurance market is competitive with multiple strong regional carriers. Understanding the unique choice no-fault system and regional cost variations helps you optimize coverage while managing costs effectively.

Business Insurance Guide - Comprehensive business coverage overview
Insurance for Small Business Owners - Coverage tailored for small businesses

Data Sources

Requirements and cost data in this guide come from the Pennsylvania Insurance Department (opens in new tab) , NAIC (opens in new tab) industry reports, and state regulatory filings. Learn more about our data collection methods on our Methodology page.

Frequently Asked Questions

What business insurance is required in Pennsylvania?

Pennsylvania requires workers’ compensation for most employers (including sole proprietors with employees). The state has specific requirements for commercial auto. Philadelphia and Pittsburgh may have additional municipal requirements.

How much does workers' comp cost in Pennsylvania?

Pennsylvania workers’ comp costs are above the national average. The state has relatively high benefits and a complex classification system. Costs vary significantly by industry—expect $1.50-$4.00+ per $100 of payroll depending on risk level.

Do Pennsylvania contractors need special coverage?

Pennsylvania contractors face strict insurance requirements. General liability is typically required for licensure, and workers’ comp is mandatory. Many jobs require additional insured endorsements and certificates of insurance.

What coverage do Pittsburgh and Philadelphia businesses need?

Urban Pennsylvania businesses face higher liability risks and property costs. Both cities have local business requirements, and commercial lease agreements often mandate specific coverage levels ($1-2 million liability is common).