Best Small Business Insurance in Rhode Island

Rhode Island Insurance Requirements

The State of Rhode Island has several insurance requirements for businesses that want to do business within the state. All Rhode Island employers are required to provide workers’ compensation insurance for their employees, even if they have only one. In addition, all vehicles registered and operated in the state of Rhode Island must also carry commercial auto insurance.

Rhode Island also has laws in place that require businesses to safeguard customer and employee information and require individuals whose information was exposed in a data breach or cyberattack to be notified. Although cyber liability insurance is not necessarily required by law, it is highly recommended.

Workers’ Compensation Insurance

Workers’ compensation is required in Rhode Island for all employer businesses in the state, even those with only one employee. 

Workers’ compensation in Rhode Island is governed under Rhode Island General Laws and allows few exceptions:

§ 28-29-6: Employers subject to law

Every person, firm, and private corporation, including any public service corporation, including the state, that regularly employs employees in the same business or in or about the same establishment under any contract of hire, express or implied, and a city or town in this state that votes to accept the provisions of those chapters in the manner provided shall constitute an employer subject to the provisions of chapters 29 — 38 of this title.

Rhode Island General Law notes states that when an employer hires someone, they must tell them about the company's workers' compensation insurance and post a notice about it in the workplace.

§ 28-36-13: Information furnished by insurers or self-insurers on request of director

(a) Any employer, insurance company, self-insurer or group self-insurer insuring employers against liability for personal injuries to employees shall fill out all blanks and answer all questions submitted to it by the director, relating to classifications, premium rates, amount of compensation paid, and any other information that the director may deem important either for the proper administration of chapters 29 — 38 of this title or for statistical purposes. The director shall have the authority and the jurisdiction that may be necessary to carry out duties pursuant to the provisions of this chapter, including with cause the power to subpoena. The director shall have discretion to assess an administrative penalty of not more than two hundred fifty dollars ($250) per offense against any employer, insurance company, self-insurer or group self-insurer that fails to provide information requested by the director under this section. Any employer, insurance company, self-insurer or group self-insurer that willfully fails to notify the director as required in this section shall be subject to prosecution for a misdemeanor and upon conviction may be punished by a fine of not more than two hundred fifty dollars ($250) for each offense. All criminal actions for any violation of this section shall be prosecuted by the attorney general at the request of the director.

(b) Any employer, insurance company, self-insurer or group self-insurer that willfully fails to apply the proper classification based on a ruling of the classification appeals board or to timely adjust incurred losses shall be subject to prosecution for a misdemeanor and upon conviction may be punished by a fine of not more than two hundred fifty dollars ($250) for each offense. All criminal actions for any violation of this section shall be prosecuted by the attorney general at the request of the director. Additionally, the director shall have discretion to assess an administrative penalty of not more than two hundred fifty dollars ($250) per offense against any employer, insurance company, self-insurer or group self-insurer that violates this section.

(c) The director in his or her discretion, may bring a civil action to collect all penalties assessed pursuant to this section. The workers' compensation court shall have jurisdiction to enforce compliance with any order of the director made pursuant to this section.

(d) All fines or penalties collected pursuant to this section shall be deposited in the general fund.

Rhode Island law also outlines the penalties for companies that fail to comply with the state’s workers’ compensation requirements and the personal liability of corporate officers, including penalties, interest, fines, and potential criminal prosecution, as outlined in Rhode Island General Law:

§ 28-36-15: Penalty for failure to secure compensation — Personal liability of corporate officers.

(a) Any employer required to secure the payment of compensation under chapters 29 — 38 of this title who knowingly fails to secure that compensation shall be guilty of a felony and shall be subject to imprisonment for up to two (2) years. In addition to the foregoing, the employer shall be subject to a civil penalty punished by a fine not to exceed one thousand dollars ($1,000) for each day of noncompliance with the requirements of this title. The director shall institute any and all reasonable measures to comprehensively monitor, investigate, and otherwise discover all employer noncompliance with this section and shall establish rules and regulations governing these measures. Each day shall constitute a separate and distinct offense for calculation of the penalty. Where that employer is a corporation, the president, vice president, secretary, treasurer, and other officers of the corporation shall be severally liable for the fine, penalty or imprisonment as provided in this section for the failure of that corporation to secure the payment of compensation. The president, vice president, secretary, treasurer, and other officers of the corporation shall also be severally personally liable, jointly with the corporation for any compensation or other benefit that may accrue under those chapters in respect to any injury that may occur to any employee of that corporation while it fails to secure the payment of compensation as required by those chapters.

(b) Where the employer is a limited-liability company, the managers and managing members who knowingly fail to secure the payment of compensation under chapters 29 — 38 of this title shall be guilty of a felony and shall be subject to imprisonment for up to two (2) years. The managers and managing members shall also be severally liable for the fine, penalty, or imprisonment as provided in this section for the failure of that company to secure the payment of compensation. The managers and managing members shall be severally personally liable, jointly with the company, for any compensation or other benefit that may accrue under those chapters in respect to any injury that may occur to any employee of that company while it fails to secure the payment of compensation as required by those chapters.

(c) Where the employer is a partnership, or a registered limited-liability partnership, the partners who knowingly fail to secure the payment of compensation under chapters 29 — 38 of this title shall be guilty of a felony and shall be subject to imprisonment for up to two (2) years. The partners shall also be severally liable for the fine, penalty, or imprisonment as provided in this section for the failure of that partnership to secure the payment of compensation. The partners shall be severally personally liable, jointly with the partnership, for any compensation or other benefit that may accrue under those chapters in respect to any injury that may occur to any employee of that partnership while it fails to secure the payment as required by those chapters.

(d) Where the employer is a limited partnership or a registered limited-liability limited partnership, the general partners who knowingly fail to secure the payment of compensation under chapters 29 — 38 of this title shall be guilty of a felony and shall be subject to imprisonment for up to two (2) years. The general partners shall also be severally liable for the fine, penalty, or imprisonment as provided in this section for the failure of that limited partnership to secure the payment of compensation. The general partners shall be severally personally liable, jointly with the limited partnership, for any compensation or other benefit that may accrue under those chapters in respect to any injury that may occur to any employee of that partnership while it fails to secure the payment of compensation as required by those chapters.

(e) All criminal actions for any violation of this section shall be prosecuted by the attorney general. The attorney general shall prosecute actions to enforce the payment of penalties and fines at the request of the director. The workers' compensation court shall have jurisdiction over all civil actions filed pursuant to this section.

The court shall consider the following factors in assessing a civil penalty: gravity of offense; resources of the employer; effect of the penalty on employees of the company; the reason for the lapse in coverage; and the recommendation of the director. Following a review of the factors set forth above, the court may suspend all or a part of a civil penalty or shall establish a time table for compliance with any court order.

Commercial Auto Insurance

The State of Rhode Island also requires any vehicle registered or operated within the state to be covered by commercial auto insurance. According to Rhode Island law, it is illegal to drive a car without insurance or other proof of financial responsibility. It is also illegal for a vehicle owner to allow a driver to use their automobile without proof of financial accountability.

Title 31 of Rhode Island General Law governs the financial accountability of owning and operating a vehicle in the state of Rhode Island and establishes penalties for failing to maintain proof of financial responsibility:

§ 31-32-2: "Proof of financial responsibility for the future" defined

(a) "Proof of financial responsibility for the future", as used in this chapter, means proof of ability to respond in damages for liability, on account of accidents occurring subsequent to the effective date of the proof, arising out of the ownership, maintenance, or use of a vehicle of a type subject to registration under the laws of this state, in the amount of twenty-five thousand dollars ($25,000) because of bodily injury to or death of one person in any one accident, and, subject to the limit for one person, in the amount of fifty thousand dollars ($50,000) because of bodily injury to or death of two (2) or more persons in any one accident, and in the amount of twenty-five thousand dollars ($25,000) because of injury to or destruction of property of others in any one accident or seventy-five thousand dollars ($75,000) combined single limit.

(b) Wherever used in this chapter, "proof of financial responsibility" or "proof " is synonymous with the term "proof of financial responsibility for the future".

Title 31 goes on to define the penalties for driving a vehicle in the state of Rhode Island without proof of insurance or other financial responsibility:

§ 31-47-9: Penalties

(a) Any owner of a motor vehicle registered or required to be registered in this state who shall knowingly operate the motor vehicle or knowingly permit it to be operated in this state without having in full force and effect the financial security required by the provisions of this chapter, and any other person who shall operate in this state any motor vehicle registered or required to be registered in this state with the knowledge that the owner of it does not have in full force and effect financial security, except a person who, at the time of operation of the motor vehicle, had in effect an operator's policy of liability insurance with respect to his or her operation of the vehicle, may be subject to a mandatory suspension of license and registration as follows:

(1) For a first offense, a suspension of up to three (3) months and may be fined one hundred dollars ($100) up to five hundred dollars ($500);

(2) For a second offense, a suspension of six (6) months and may be fined five hundred dollars ($500); and

(3) For a third and subsequent offense, a suspension of up to one year. Additionally, any person violating this section a third or subsequent time shall be punished as a civil violation and may be fined one thousand dollars ($1,000).

(b) An order of suspension and impoundment of a license or registration, or both, shall state that date on or before which the person is required to surrender the person's license or certificate of registration and registration plates. The person is deemed to have surrendered the license or certificate of registration and registration plates, in compliance with the order, if the person does either of the following:

(1) On or before the date specified in the order, personally delivers the license or certificate of registration and registration plates, or causes the delivery of those items, to the administrator of the division of motor vehicles or court, whichever issued the order; or

(2) Mails the license or certificate of registration and registration plates to the administrator of the division of motor vehicles, in an envelope or container bearing a postmark showing a date no later than the date specified in the order.

(c) The administrator of the division of motor vehicles shall not restore any operating privileges or registration rights suspended under this section or return any license, certificate of registration, or registration plates impounded under this section unless the rights are not subject to suspension or revocation under any other law and unless the person, in addition to complying with all other conditions required by law for reinstatement of operating privileges or registration rights, complies with all of the following:

(1) Pays a reinstatement fee of thirty dollars ($30.00). The reinstatement fee may be increased, upon approval of the administrator of the division of motor vehicles, up to an amount not exceeding fifty dollars ($50.00); and

(2) Files and maintains proof of financial security. To facilitate the administration of this chapter the clerk of the courts shall notify the administrator of the division of motor vehicles of all persons against whom judgments have been entered arising out of a motor vehicle collision.

(d) For the purpose of this section, an "operator's policy of liability insurance" means a policy issued by an insurance carrier duly authorized to transact business in this state that shall insure the person named in it as insured, against loss from the liability imposed upon him or her by law for damages, including damages for care and loss of services, because of bodily injury to or death of any person and injury to or destruction of property arising out of the use by him or her of any motor vehicle not owned by him or her, subject to the same minimum provisions and approval required by this chapter with respect to an owner's policy of liability insurance. With respect to a nonresident, the policy may also be issued by a nonadmitted insurance carrier provided the requirements of this chapter, with respect to issuance of an owner's policy of liability insurance by the carrier, have been met.

Data Breach Insurance

Laws in the State of Rhode Island mandate that companies handling peoples' personal identifying information (PII) and personal health information (PHI) notify such people when their personal information is compromised. While Rhode Island law does not mandate that businesses purchase data breach or cyber liability insurance, doing so could save a company that has suffered a cyber assault a lot of money in the long run. 

Rhode Island’s Identity Theft Protection Act of 2015 requires that businesses that do business in Rhode Island or keep personal information about people who live in Rhode Island tell customers or employees if their personal information has been accessed by anyone unauthorized to do so

§ 11-49.3-4: Notification of breach

(a) (1) Any municipal agency, state agency, or person that stores, owns, collects, processes, maintains, acquires, uses, or licenses data that includes personal information shall provide notification as set forth in this section of any disclosure of personal information, or any breach of the security of the system, that poses a significant risk of identity theft to any resident of Rhode Island whose personal information was, or is reasonably believed to have been, acquired by an unauthorized person or entity.

(2) The notification shall be made in the most expedient time possible, but no later than forty-five (45) calendar days after confirmation of the breach and the ability to ascertain the information required to fulfill the notice requirements contained in subsection (d) of this section, and shall be consistent with the legitimate needs of law enforcement as provided in subsection (c) of this section. In the event that more than five hundred (500) Rhode Island residents are to be notified, the municipal agency, state agency, or person shall notify the attorney general and the major credit reporting agencies as to the timing, content, and distribution of the notices and the approximate number of affected individuals. Notification to the attorney general and the major credit reporting agencies shall be made without delaying notice to affected Rhode Island residents.

(b) The notification required by this section may be delayed if a federal, state, or local law enforcement agency determines that the notification will impede a criminal investigation. The federal, state, or local law enforcement agency must notify the municipal agency, state agency, or person of the request to delay notification without unreasonable delay. If notice is delayed due to such determination, then, as soon as the federal, state, or municipal law enforcement agency determines and informs the municipal agency, state agency, or person that notification no longer poses a risk of impeding an investigation, notice shall be provided as soon as practicable pursuant to subsection (a)(2). The municipal agency, state agency, or person shall cooperate with federal, state, or municipal law enforcement in its investigation of any breach of security or unauthorized acquisition or use, which shall include the sharing of information relevant to the incident; provided however, that such disclosure shall not require the disclosure of confidential business information or trade secrets.

(c) Any municipal agency, state agency, or person required to make notification under this section and fails to do so is liable for a violation as set forth in § 11-49.3-5.

(d) The notification to individuals must include the following information to the extent known:

(1) A general and brief description of the incident, including how the security breach occurred and the number of affected individuals;

(2) The type of information that was subject to the breach;

(3) Date of breach, estimated date of breach, or the date range within which the breach occurred;

(4) Date that the breach was discovered;

(5) A clear and concise description of any remediation services offered to affected individuals including toll free numbers and websites to contact: (i) The credit reporting agencies; (ii) Remediation service providers; (iii) The attorney general; and

(6) A clear and concise description of the consumer's ability to file or obtain a police report; how a consumer requests a security freeze and the necessary information to be provided when requesting the security freeze; and that fees may be required to be paid to the consumer reporting agencies.

In cases where the business was reckless or willful in their handling of customer or employee information, the State of Rhode Island may also impose penalties and fines of up to $200 per compromised individual:

§ 11-49.3-5: Penalties for violation

(a) Each reckless violation of this chapter is a civil violation for which a penalty of not more than one hundred dollars ($100) per record may be adjudged against a defendant.

(b) Each knowing and willful violation of this chapter is a civil violation for which a penalty of not more than two hundred dollars ($200) per record may be adjudged against a defendant.

(c) Whenever the attorney general has reason to believe that a violation of this chapter has occurred and that proceedings would be in the public interest, the attorney general may bring an action in the name of the state against the business or person in violation.

Rhode Island Insurance Resources

Center for Consumer Information and Insurance Oversight (CCIIO)
Rhode Island Department of Business Regulation
Rhode Island Division of Insurance
Rhode Island Department of Transportation
What Employers Need to Know about Workers' Compensation
Basic Questions About Workers’ Compensation
Consumer Guide to Auto Insurance

General Liability Insurance

The vast majority of Rhode Island companies purchase general liability insurance from an insurance company even though it is not legally required. This type of business liability insurance covers third-party bodily injury, third-party property damage, advertising liability, libel, slander, copyright issue, and other common claims faced by companies across various industries. 

General liability insurance is one of the most important types of business insurance your company can purchase.

Business Owner’s Policy

A business owner’s policy (BOP) is an affordable way to bundle business insurance coverages. This type of policy includes commercial general liability insurance with commercial business property insurance. Many small business owners with a physical business space opt for this coverage.

Commercial Auto Insurance

You need to carry commercial auto insurance if your company uses vehicles to transport people or goods. This type of insurance is very similar to personal auto insurance and covers liability, medical costs, collisions, and uninsured/underinsured motorists. A commercial auto policy also covers vehicles rented or owned by your company and employees who use their own vehicles for company business.

Workers’ Compensation Insurance

Rhode Island requires businesses with any full-time or part-time employees to carry workers’ compensation insurance. Taking out workers' compensation insurance puts a limit on the amount and type of compensation that an injured employee may receive. The limits are set by law.

Employee Health/Life/Disability Insurance

Companies that provide health, life, and/or disability insurance as a fringe benefit will need appropriate Rhode Island insurance. Under the Affordable Care Act, firms with more than 50 full-time employees must offer health insurance or pay an expensive penalty.

Professional Liability Insurance

Professional liability insurance covers financial risks to attorneys, accountants, and other people who provide professional services or expertise. Professional liability coverage varies depending on the industry but usually includes negligence, legal defense, slander or libel, and copyright and trademark disputes. 

Professional liability insurance includes errors and omissions (E&O) insurance.

Data Breach Insurance

If your company hosts customers’ personal information on its servers and those servers are hacked, lawsuits and damages can result. Data breach insurance protects you in these cases. 

Cyber Liability Insurance

Similar to but more comprehensive than data breach insurance, cyber liability insurance may pay for legal expenses related to a data breach or set up a call center for individuals affected by a breach. It also may pay for active protection against cyberattacks.

Commercial Crime Insurance

Crimes like extortion, forgery, burglary, computer fraud, and embezzlement are covered by commercial crime insurance. Situations in which this type of insurance is particularly useful include dishonest or libelous acts by employees.

Fiduciary Liability Insurance

Fiduciaries, who are legally required to act in plan participants’ best interests rather than the company’s when choosing advisors and investments, should consider this type of insurance coverage. It covers them if they are sued for allegedly providing negligent investment advice or administering plans or benefits incorrectly. 

Third parties like out-of-company consultants and benefit plan administrators are usually not protected.

Directors and Officers Insurance

Any company with directors and officers should consider directors and officers (D&O) insurance coverage, a type of liability insurance that reimburses directors and officers for claims made against them regarding harm allegedly caused by their management decisions.

Executive Risk Coverage

Executive risk insurance is business liability insurance that provides coverage for fraud, D&O, employment practices, initial public offerings, pension funds, extortion, and professional negligence.