Virginia Business Insurance Guide: Government Contracting and Tech Corridor Requirements

Virginia’s unique position adjacent to the nation’s capital makes it the premier destination for government contractors, defense companies, and an increasingly dominant tech sector. From Northern Virginia’s data center alley to Hampton Roads’ naval installations, the Commonwealth offers tremendous business opportunities—along with specific insurance requirements that reflect these industries.

Virginia Insurance Requirements at a Glance

Workers’ Compensation in Virginia

Coverage Requirements

Mandatory Coverage:

• Employers with 3 or more employees must provide workers’ comp
• Includes part-time employees
• Corporate officers count as employees (but can opt out)

Voluntary Coverage:

• Employers with fewer than 3 employees may elect coverage
• Recommended for liability protection

Virginia’s Competitive Market

Virginia has a fully competitive workers’ comp market:

• Private insurers compete for business
• No state fund
• Assigned Risk Pool for hard-to-place risks
• Self-insurance available for qualified employers

Cost Factors by Industry

Experience Modification Rate

Virginia uses standard NCCI experience rating:

• EMR of 1.0 = industry average
• Below 1.0 = safety discount
• Above 1.0 = surcharge

Government Contractor Tip: Many federal contracts require EMR below 1.0 to bid—maintain excellent safety records.

Government Contractor Insurance Requirements

Federal Contract Requirements

Government contractors face specific insurance mandates:

Standard Contract Requirements (FAR):

Defense Contractor Considerations

DFARS Compliance:

• Cybersecurity requirements (CMMC)
• Cyber liability insurance increasingly mandated
• CUI (Controlled Unclassified Information) handling requirements

Specialized Coverages:

• Government property coverage
• Errors and omissions for technical services
• Cost of correction coverage
• Completed operations coverage

Small Business Set-Aside Requirements

8(a), HUBZone, and other set-aside programs may require:

• Bonding capacity
• Adequate insurance limits
• Past performance insurance history
• Subcontractor insurance compliance

Northern Virginia Tech Corridor

Data Center Alley Insurance

Northern Virginia hosts the largest concentration of data centers globally:

Essential Coverages:

Tech Company Requirements

Virginia’s tech economy demands:

• Cyber liability - Essential for any data handling
• D&O insurance - Particularly for VC-backed companies
• Employment practices liability - High-competition hiring environment
• Key person insurance - Protecting critical talent

Hampton Roads Defense Industry

Shipbuilding and Maritime

Newport News Shipbuilding and the naval presence create unique needs:

Maritime Coverages:

• USL&H (Longshore and Harbor Workers)
• Jones Act coverage
• Marine general liability
• Builder’s risk for vessels
• Protection & Indemnity

Defense Manufacturing:

• Product liability for defense products
• Government property coverage
• Professional liability for engineering
• Recall coverage

Military Installation Contractors

Contractors working on military bases need:

• Base access compliance
• Security clearance considerations
• Federal tort claims awareness
• Government vehicle coverage

Commercial Property Considerations

Regional Risk Factors

Coastal Virginia (Hampton Roads, Virginia Beach):

• Hurricane exposure
• Flood zones (NFIP or private flood)
• Wind/hail deductibles
• Named storm deductibles

Northern Virginia:

• Lower natural catastrophe risk
• Higher property values
• Business interruption critical
• Data center specific coverages

Western Virginia:

• Flash flood exposure in mountain areas
• More affordable property rates
• Rural fire response considerations

Hurricane Preparedness

Coastal businesses should understand:

• Named storm deductibles - Often 2-5% of building value
• Flood insurance - Separate policy required
• Business interruption - Waiting periods and coverage triggers
• Debris removal - May have sublimits

Professional Services Insurance

Consulting and Advisory Firms

Virginia’s concentration of consulting firms requires:

Security Contractors

Northern Virginia’s security industry needs:

• Armed guard coverage
• Investigation services E&O
• Cyber security consulting coverage
• Government classified work coverage

Commercial Auto Insurance

Virginia Requirements

Minimum Liability Limits:

• $30,000 bodily injury per person
• $60,000 bodily injury per accident
• $20,000 property damage

Recommended Business Limits:

• $1M combined single limit
• Hired and non-owned auto coverage
• Umbrella coverage for fleet operations

Fleet Considerations

Virginia’s congested corridors require:

• Defensive driver training programs
• Telematics for fleet monitoring
• Higher limits for I-95/I-495 exposure
• Uninsured motorist coverage

Cost Management Strategies

Virginia-Specific Opportunities

1. Experience modification improvement - Critical for government bidding
2. Safety programs - Workers’ comp premium reduction
3. Cyber risk management - Increasingly affects all insurance costs
4. Policy packaging - Bundle commercial lines for discounts
5. Higher deductibles - Trade retention for premium savings

Government Contractor Strategies

• Maintain clean EMR - Required for many contracts
• Build bonding capacity - Start early, grow gradually
• Document safety programs - Required for contract compliance
• Cyber compliance - CMMC requirements affect insurance

Regulatory Resources

Key Virginia Agencies

• State Corporation Commission - Bureau of Insurance: scc.virginia.gov/boi
• Virginia Workers’ Compensation Commission: workcomp.virginia.gov
• Virginia Employment Commission: vec.virginia.gov

Federal Resources (Contractors)

• SAM.gov - Federal contractor registration
• GSA - Schedule contracts and requirements
• SBA - Small business programs

Regional Insurance Markets

Northern Virginia

• Highest concentration of specialized insurers
• Government contractor expertise available
• Competitive cyber liability market
• Premium pricing due to high values

Hampton Roads

• Maritime insurance specialists
• Defense contractor experience
• Coastal property expertise
• Shipyard coverage specialists

Richmond/Central Virginia

• More affordable rates
• Growing business community
• Traditional industries well-served
• Less specialized market

Southwestern Virginia

• Rural business focus
• Mining/extraction industries
• Limited carrier options
• Regional carriers important

Business Insurance Checklist for Virginia

Required Coverage

• Workers’ compensation (3+ employees)
• Commercial auto liability
• Unemployment insurance

Government Contractors

• FAR-required coverages
• Professional liability/E&O
• Cyber liability (DFARS compliance)
• Fidelity bond (if required)
• Government property coverage

Strongly Recommended

• General liability ($1M minimum)
• Commercial property
• Business interruption
• Umbrella/excess liability

Coastal Businesses

• Flood insurance
• Windstorm coverage
• Named storm deductible planning

Key Takeaways

1. Workers’ comp threshold is 3 employees - Smaller employers may still elect coverage
2. Government contracts drive requirements - FAR/DFARS compliance is essential
3. Cyber liability is increasingly mandatory - CMMC affects contractor coverage needs
4. Regional differences are significant - Hampton Roads vs. Northern Virginia markets differ
5. EMR matters for bidding - Maintain safety records for contract eligibility

This guide provides general information about Virginia business insurance requirements. Consult with a licensed Virginia insurance professional for advice specific to your business situation.