Types of Small Business Insurance (2024)

What Types of Small Business Insurance Do Business Owners Need?

If you’re asking yourself “Do I need insurance for my small business?" the answer is yes. Every business owner needs small business insuranceto help protect their company from potential risks and hazards. But how do you choose the right coverages? At minimum, you should start with these types of small business insurance:

General liability coverage
Workers’ compensation coverage
Commercial autocoverage

You’ll also want to think about what you use to keep your business running, like tools and equipment. Certain coverages can help protect these belongings. To learn more, call our specialists at 855-829-1683. They’ll help walk you through the right coverages and limits for your company.

Basic BusinessInsurance Needed for Small Business

The average customer injury or property damage claim is $30,000.¹That’s why aBusiness Owner’s Policy(BOP) is helpful for many companies.

This policy combines business property and business liability insuranceinto one. We can help you customize it to fill in any gaps that your BOP doesn’t cover. You can count on us to make sure you’re prepared for accidents, liability lawsuits, damaging weather and any potential hazards that come your way.

How To Determine What Types of Small Business Insurance You Need?

The risks that your business faces determines the type of small business insurance that you need. For example, if your small business has valuable property, you may need a commercial property insurance policy. You may also need a commercial auto insurance policy if your business owns and operates vehicles. And if you have employees, a workers’ compensation policy may be required by your state.

For companies that have lower risks and hazards, a Business Owner’s Policy (BOP) can help you save money by bundling coverages. For example, you can bundle coverages like general liability, professional liability and workers’ compensation.

What Types of Small Business Insurance Coverages Are Required for Most Businesses?

General Liability Insurance

Who Needs It?General liability insuranceis important for small businesses that have customers visiting their location or storefront.

For What? This policy helps cover property damage or accidental injuries.

What Does It Cover? General liability insurance can help cover claims of bodily injury, property damage, reputational harm, advertising injury or damage to property rented to you.

Example: If a customer slips and falls while shopping in your store, this coverage can help pay for their medical bills. Without it, you’ll have to pay these costs out of pocket.

Workers’ Compensation Insurance

Who Needs It?Workers’ compensation insuranceis important for small businesses that have employees.

For What? This coverage helps provide benefits to your employees if they have a work-related injury or illness.

What Does It Cover? If your employee has a work-related injury or illness, workers’ comp can help pay for:

Medical care
Lost wages
Disability benefits
Funeral expenses

Example: If your employee lifts too many heavy boxes and gets tendonitis, this coverage can help pay for their medical treatment.

Commercial Auto Insurance

Who Needs It? Commercial auto insuranceis important for small businesses that have employees who drive leased, rented or owned company vehicles. It also helps cover employees that drive their own cars on the job.

For What? This coverage helps pay costs from accidents if you or your employees are at-fault.

What Does It Cover? Commercial auto insurance helps cover property damage and medical expenses resulting from an accident while driving a company-owned vehicle.

Example: If your worker is using your company’s van for deliveries and accidently hits a customer’s car while leaving your business, this coverage can help pay for the damages.

Professional Liability Insurance

Who Needs It?Professional liability insuranceis important if your business provides professional services and advice.

For What? This policy helps cover errors or omissions in your services provided to clients.

What Does It Cover? This coverage can help protect you if you or your employees make any mistakes in your professional services.

Example: If your employee gives a client advice that results in a financial loss instead of gain, your customer may sue you for negligence. Professional liability insurance can help pay your legal fees.

Business Income Insurance

Who Needs It?Business income insuranceis important for most small businesses. It helps replace lost income if you’re unable to operate due to a covered property damage.

For What? This policy helps replace lost income if your business needs to temporarily shut down due to a covered property damage like fire.

What Does It Cover? It helps cover lost income if you’re unable to operate temporarily.

Example: Business income insurance helps replace lost income from fire, wind damage, theft and other covered losses. So, if you need to temporarily shut-down your restaurant due to a fire, this coverage can help pay your lost revenue.

Commercial Property Insurance

Who Needs It?Commercial property insuranceis important for small businesses with an owned or rented building, plus tools and equipment needed to operate their business.

For What? This policy helps cover property damage from fire, burglary, theft, wind and lightning.

What Does It Cover? Commercial property insurance helps cover your business’ physical location and other property like your tools, equipment, inventory, and furniture.

Business Owners’ Policy (BOP)

Who Needs It? A Business Owners’ Policy (BOP) is a good choice for businesses that face common risks and are looking to save money by bundling coverages.

For What? This policy allows you to bundle coverages like business property insurance, general liability insurance, business income insurance and more into one convenient policy.

What Does It Cover? BOPs help cover you from claims resulting from fire, theft and other covered disasters.

Example: If a customer trips, falls and breaks their leg while in your store, your business owners’ policy can help cover their medical expenses.

Data Breach Insurance

Who Needs It?Data breach insurance, also known as cyber liability insurance helps cover your business from cyber risks like breaches and hacking.

For What? This coverage can help you respond quickly after a data breach or cyber-attack.

What Does It Cover? It can help you respond to a cyber-attack if:

Your business’ computers get a virus that exposes private or sensitive information.
Customers or patients sue you after your business loses PII or PHI.
You’re faced with high public relations costs to help protect your business’ reputation after a data breach.

Example: If a hacker deletes files on your computers and demands a ransom, data breach insurance coverage can help you respond to the attack.

Browse Business Insurance Policies by Your Industry

Your business insurance needs are dependent on the industry of your small business. To learn more about the coverages your industry needs, read through these links:

Beauty Shop Insurance

Consulting Insurance

Photography Insurance

Retail Insurance

Technology Insurance

Do I Need Liability Insurance for My Small Business?

Every small business faces certain hazards and risks. 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
Management liability insurance
Data Breach or Cyber liability insurance

Benefits of Packaging Different Types of Small Business Insurance

We can help you save money on business insurance costs by offering a packaged policy. For example, you can bundle these three insurance coverages into one with our Business Owners’ Policy (BOP):

General liability insurance
Business income insurance
Commercial property insurance

We offer packaged policies for various industries. For example, if you want comprehensive coverage for your dental practice, we offer dental office insurance.

What Is a Small Business Owner’s Policy (BOP)?

Packaged policies, like a BOP allow you to protect your business from:

Property damage
Lost income
Liability claims

This policy gives small business owners a good start toward protecting the business they’ve worked so hard to build. The cost of insurance for a startup business will vary depending on a few factors.

We can help if you’re wondering, “What does compensation mean?” or “What is small business insurance?” Our specialists can walk you through all the types of business insurance that are available. Get a small business insurance quote with us today.

Types of Small Business Insurance FAQs

What Type of Insurance Is Best for a Small Business?

There are a few main insurance coverages that are recommended for most small businesses, including:

General liability insurance
Commercial auto insurance
Professional liability insurance

A Business Owners’ Policy (BOP) is a great way to save money and get the coverages you need in one policy.

What Are the 4 Main Types of Insurance?

Four common types of business insurance include:

Business property insurance to help protect your business’ owned and rented building, tools and equipment.
General liability insurance which covers you from claims of bodily injury, negligence, property damage, libel and slander.
Business income insurance to help replace lost income if you can’t run your business due to covered property damage.
Workers’ compensation insurance, which helps cover your employees if they get a work-related injury or illness or if you are sued by that employee.

What Type of Insurance Do You Need To Run a Business?

The type of insurance you need varies depending on factors like your industry, payroll and type of work. In most cases you’ll want a general liability insurance policy, especially if customers or clients come to your business. If you have employees, you’ll also likely need a workers’ compensation insurance policy. This helps cover injuries or illnesses that your workers get on the job. You may need a commercial auto insurance policy if you or your employees drive a vehicle on the job. By assessing your risks, you can determine the types of coverage your small business needs.

What Are the Different Types of Small Business Insurance?

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