What Insurance Do I Need for a Small Business? (2024)

11 Types of Insurance Needed for Small Businesses

What Insurance Do I Need for a Small Business? (1)What insurance do you need for a small business? We hear this question often, but there’s not a simple answer. That’s because the types of business insurance coverage that you need for your small business depends on what your company does and the state you’re in. In fact, state laws require some small business insurancepolicies and it’s up to you to make sure you have the right coverage.

Without the right types of small business insurance, you may have to pay out of pocket for claims. Many small businesses don’t have the resources or capital to cover claims, which means they may not survive. That’s why small business insurance is an important investment for protecting your company.

The 11 most common types of insurance that small businesses need are:

1. General Liability Insurance

General liability insurancehelps protect your business from claims that it caused bodily injury or property damage to someone else. For example, if a customer slips in your store, this coverage can help pay for their medical expenses.Liability claims from work done away from your location can also be covered under a coverage known as products-completed operations coverage.

Many small business owners also get a general liability insurance policy that includes product liability insurance. This can help protect their company from claims of bodily injury or property damage that their products cause.

2. Professional Liability Insurance

professional liability insurance helps cover claims related to mistakes in the professional services that your business provides. Let’s say your accounting firm makes a mistake on a customer’s financial statement and they have to pay a penalty. If they sue your business, professional liability insurance can help cover your legal costs. Investing in this coverage can help you save money in claims costs. This coverage is also known aserrors and omissions insurance or E&O insurance.

3. Business Income Coverage

Business income coverage, also known as business interruption insurance, can help replace lost income if you can’t operate because of covered property damage. This includes damage from fires, storms or theft.

4. Commercial Property Insurance

Commercial property insurancehelps protect your owned or rented building and equipment used to operate. So, if someone breaks into your building and steals your business computers, commercial property insurance can help cover the replacement costs.

5. Workers’ Compensation Insurance

Workers’ compensation insuranceprovides benefits to employees if they get a work-related injury or illness. For example, if an employee gets carpal tunnel syndrome from years of typing and poor ergonomics, this insurance can help pay for their treatment costs. Most states require businesses to have this coverage if they have employees.

6. Commercial Auto Insurance

Commercial auto insurancehelps cover property damage and bodily injury claims if you or an employee gets into an accident while driving a company-owned vehicle for business. So, if your employee swerves off the road while making a delivery and hits a mailbox, this insurance can help pay for the damages.

7. Data Breach Insurance

Data breach insurance helps your business respond to a breach if personally identifiable information gets lost or stolen. It can help cover your costs to:

  • Notify impacted customers or clients
  • Run a public relations campaign to improve your business’ reputation
  • Offer credit monitoring services

Some insurance companies may call this coverage cyber liability insurance.

8. Commercial Umbrella Insurance

Commercial umbrella insuranceextends the limits of certain liability policies that your business has. So, if a claims cost exceeds your policy’s limits, commercial umbrella insurance can help cover the difference.

9. Employment Practices Liability Insurance

Employment practices liability insurance, also known as employers’ liability insurance, helps protect your business from employment-related claims. This includes claims of:

  • Discrimination
  • Sexual harassment
  • Wrongful termination

10. Business Owner’s Policy (BOP)

ABusiness Owner’s Policy(BOP) is one of the most popular types of insurance. It combines:

  • General liability insurance
  • Commercial property insurance
  • Business income insurance

11. Hazard Insurance

Small business hazard insuranceis another name for commercial property insurance. It helps protect the owned or rented business property, like your building and equipment.

Do I Need Liability Insurance for My Small Business?

What Insurance Do I Need for a Small Business? (2)The quick answer is yes. Most businesses need liability insurance for small business. But there are several different types of liability coverage to choose from. The most common are general liability and professional liability.

Getting the right business insurance coverage isn’t any different than protecting your home with homeowners insurance – they’re both some of the most important investments you’ll ever make.

Combining insurance with bonds like surety bonds can add to your protection. To learn more about the business insurance coverage you should have, get a quotetoday.

We make it easy for you to customize your policy to get thebest small business insurance coverage you need.If you need more customization to your base coverage, insurance riderscan help you do that.

What Insurance Do I Need To Start My Own Business?

When you’re starting your own business, some types of coverage you should make sure to have are:

  • General liability insurance
  • Professional liability insurance
  • Workers’ compensation insurance

The actual types of insurance and whether you need additional coverage depends on what your company does and thestate laws where you are.

Do All Small Businesses Have Insurance?

If you’re still wondering, “Do I need insurance for my small business?” The answer is yes. Most small businesses need some type of coverage for protection from various risks, like:

  • Bodily injury
  • Property damage
  • Car accidents
  • Lawsuits

Without coverage, you’ll have to pay out of pocket for claims reported against your business. Having to pay these costs out of pocket can cause severe financial losses that can shut down your business. We have been helping small businesses like yours for over 200 years, making sure you get the kind of coverage you need. Let us help make sure you’re protected. Get asmall business insurance quote today.

Last Updated: August 14, 2023

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What Are the Different Types of Small Business Insurance?

Watch this video for more information about how this coverage protects your business.

What Insurance Do I Need for a Small Business? (2024)


What Insurance Do I Need for a Small Business? ›

General liability insurance, also known as business or commercial liability insurance, is essential coverage for various claims, including bodily injury, property damage, personal or advertising injury, medical payments, products-completed operations, and damages to premises rented to you.

What type of insurance do you need to own a business? ›

Six common types of business insurance
Insurance typeWho it's for
General liability insuranceAny business
Product liability insuranceBusinesses that manufacture, wholesale, distribute, and retail a product
Professional liability insuranceBusinesses that provide services to customers
3 more rows

Which type of insurance is most important for a business? ›

General liability insurance, also known as business or commercial liability insurance, is essential coverage for various claims, including bodily injury, property damage, personal or advertising injury, medical payments, products-completed operations, and damages to premises rented to you.

What type of insurance is sold to small businesses? ›

To help protect your business, you'll need to get the right liability insurance for small business, including: General liability insurance for small business. Professional liability insurance. Employment practices liability insurance.

Which coverage would a business owner need? ›

General liability insurance can be purchased as a standalone policy, but most business owners opt for a Business Owner's Policy (BOP) for more coverage. A BOP combines general liability insurance with commercial property and business income coverage into one convenient policy.

How do I self insure my business? ›

Normally, a prospective self-insured submits a required application accompanied by audited financial data, prior workers' compensation loss history, and other information required by each state. The state will then approve or disapprove the application.

What types of insurance are not recommended? ›

15 Insurance Policies You Don't Need
  • Private Mortgage Insurance. ...
  • Extended Warranties. ...
  • Automobile Collision Insurance. ...
  • Rental Car Insurance. ...
  • Car Rental Damage Insurance. ...
  • Flight Insurance. ...
  • Water Line Coverage. ...
  • Life Insurance for Children.

What are the 3 most important insurance? ›

There are many types of insurance available, but there are some which top the charts in terms of importance. Home or property insurance, life insurance, disability insurance, health insurance, and automobile insurance are five types that everyone should have.

What do you call the owner of a small business? ›

A sole proprietor is a commonly used legal term that describes the single owner of a business, someone who is also legally tied to the respective company and considered the same legal entity.

What are the 4 most common insurance? ›

Most experts agree that life, health, long-term disability, and auto insurance are the four types of insurance you must have.

What is business insurance called? ›

Commercial insurance is also called business insurance. Business insurance covers losses related to unexpected events like lawsuits, accidents, or natural disasters, among others.

What is a small business property insurance? ›

Business property insurance covers your buildings, the contents within those buildings, and loss of income if you're out of business due to a claim. It can help protect your business in case of unexpected accidents or tragedies like fire, theft, wind damage, or even a building's collapse under the weight of snow.

Who is not eligible for a BOP? ›

To qualify for BOP savings, businesses typically must operate in a low-risk industry, have fewer than 100 employees, make less than $1 million in annual revenue, and maintain a small commercial space.

What type of insurance protects a business against fire damage? ›

Commercial fire insurance is typically a part of a policyholder's commercial property insurance, general liability insurance and your business owner's policy (BOP), that combines commercial property and general liability to help protect small businesses.

What type of liability coverage protects businesses? ›

Types of business liability insurance include general liability insurance, professional liability insurance, and product liability insurance. This insurance protects the financial interests of business owners from penalties they may face from litigation waged against them while also covering the associated legal costs.

Do I need life insurance if I own a business? ›

Life insurance for business owners plays an important role in business continuity if you or your partner dies prematurely. Life insurance policies can be designed with buy-sell or key person coverage in mind.

What are the 4 most important insurances? ›

Most experts agree that life, health, long-term disability, and auto insurance are the four types of insurance you must have.

What type of private insurance would a person who is starting up a new small business venture most likely purchase? ›

Liability insurance is the most important. It provides compensation to persons who would be able to sue you for personal injuries, medical payments, loss of earnings, or damage to their property arising out of an auto accident.

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