Types of business insurance policies and what they cover
You can typically mix and match business insurance policies to fit your needs. Common business insurance policies include:
Commercial general liability insurance
General liability insurance protects your business against financial losses as a result of an injury, property damage, medical expenses, libel, slander, lawsuit defense, court judgments, or settlement bonds.
This coverage applies when your business is liable for injuries or damage on the premises, away from the premises, or as a result of defective work, defective goods, or improper warnings. For instance, if a customer breaks their arm while visiting your business, this policy can pay their medical bills.[2]
Professional liability insurance
Professional liability insurance protects you from financial losses arising from situations such as fraud, malpractice, conflict of interest, errors, or negligence. For example, this type of policy can protect you if you provide massage services and a client sues you over alleged skin damage.
Business owners policy (BOP)
A business owners policy bundles several types of coverage into one policy, which simplifies the insurance-buying process and typically helps you save money. A BOP usually includes general liability, commercial property/business property coverage, and business interruption insurance. You may also have the option to add coverages as needed.
Commercial property insurance
Commercial property insurance protects your business’s physical assets — such as buildings, equipment, furniture, and inventory — if a covered peril damages those assets. Covered perils may include fire, smoke, hailstorms, windstorms, and vandalism. A business owners policy usually includes this type of coverage.
Workers’ compensation insurance
Workers’ compensation insurance pays for an employee’s medical costs and lost wages if they’re injured at work. For example, this coverage might kick in after a worker breaks their wrist by slipping and falling in an office.
Commercial auto insurance
Commercial auto insurance protects vehicles that you use for commercial purposes.[3] For example, a construction company may own a fleet of trucks to transport tools and crew members to job sites. Nearly every state requires vehicle-owning businesses to carry coverage that at least meets the state’s minimum requirements.
Cyber liability insurance
Cyber liability insurance protects your business against financial losses resulting from a cyberattack. For instance, a retail ecommerce business might benefit from this type of policy if hackers gain access to their customer data.
Business interruption insurance
Business interruption insurance covers lost revenue and pays for extra expenses if business operations are interrupted. Companies that have 100 or fewer employees and revenues of up to $5 million are eligible for these plans.
Commercial umbrella insurance
A commercial umbrella insurance policy extends your liability limits to provide extra protection. For example, if you have $2 million in liability coverage from a BOP, but a client sues your business for $2.5 million, the umbrella policy would cover the $500,000 shortfall.
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