Yes, as long as they adopt clear criteria for the requirement and impose it consistently.
RCW 35.90.080(2) requires cities to include these mandatory statewide model business ordinance provisions in their local business codes:
- A uniform definition of “engaging in business within the city;” and
- A uniform licensing exemption threshold.
Beyond those mandatory provisions cities are free to adopt any otherwise lawful business licensing criteria which could include a business insurance requirement. See, e.g. RCW 35A.82.020 regarding a code city’s general licensing authority.
However, cities must establish clear criteria to apply such a requirement and enforce it consistently to reduce legal challenges or claims of discriminatory treatment from business license applicants. This can be practically challenging since deciding whether to buy insurance and the type and amounts of insurance to buy can vary significantly depending on the size, type and activities of an individual business.
It is accordingly important for cities to review any such proposed requirement with their city attorney to ensure that it is lawful and can be clearly and evenly applied. MRSC’s City Business Licenses and Fees page has additional general city business licensing information that may also be helpful.