What Insurance Does a Small Business Need?

Small business insurance, sometimes called commercial insurance for small business, is the set of policies a small business carries for lawsuits, property damage, employee injuries and other risks. Most small businesses carry more than one policy, often starting with general liability insurance or a business owner's policy. Which ones a business carries depends on your industry, your employees, your vehicles and what your clients or landlord ask for. Tivly, a licensed insurance agency, matches small businesses with one of 450+ partners.

What Is Small Business Insurance?

Small business insurance isn't one policy. It's a group of coverages that together can cover the most common risks a small business faces: third-party lawsuits, damage to property, employee injuries and lost income after a covered event. A small business insurance policy can be a single line, like general liability, or a package like a business owner's policy (BOP), which bundles general liability and commercial property. For a broader overview, see what business insurance is.

What Insurance Does a Small Business Need?

The types of insurance for small business owners depend on what you do and how you operate. These are the most common:

1. General liability insurance: can cover third-party bodily injury, property damage and advertising injury claims. It's the most common commercial liability insurance for small business.
2. Business owner's policy (BOP): combines general liability and commercial property in one policy. Many small businesses with a physical location start here.
3. Commercial property insurance: can cover buildings, equipment, inventory and furniture you own or rent.
4. Workers' compensation insurance: can cover medical costs and lost wages for employees hurt on the job. Most states require it once a business has employees.
5. Commercial auto insurance: can cover vehicles used for business, including third-party injuries and damage your drivers cause.
6. Professional liability insurance: also called errors and omissions (E&O). Can cover claims of mistakes or negligence in professional services.
7. Product liability insurance: can cover injury or damage claims tied to products you make or sell.
8. Cyber liability insurance: can cover costs after a data breach or cyberattack.
9. Commercial umbrella insurance: adds liability limits above your other policies.
10. Business interruption insurance: can cover lost income when a covered event shuts down your operations.

Do I Need Small Business Insurance?

Many small businesses look at coverage when one of these applies:

1. They have employees
2. They rent or own a workspace, and the lease or lender requires coverage
3. They use vehicles for work
4. A client contract asks for a certificate of insurance
5. They make or sell products, or give professional advice
6. They run the business from home, where a homeowner's policy may exclude business losses

Some coverage is required by law, such as workers' comp in most states once you hire employees and commercial auto liability for business vehicles. Rules vary by state, so check with your state's insurance department or labor agency. New businesses can also see business insurance for startups and home-based business insurance.

What Does Small Business Insurance Cover?

Depending on the policies you carry, small business insurance can cover:

1. Third-party claims for injuries on your premises or from your work
2. Claims tied to products you sell or advice you give
3. Damage to your property from fire, storms, theft or vandalism
4. Employee injuries on the job
5. Lost income while you recover from a covered event

Every policy has its own limits and exclusions, so what's covered comes down to the terms of each policy.

What Affects the Cost of Small Business Insurance?

There's no single price. What you pay depends on:

1. Your industry and how risky the work is
2. Your location
3. Your number of employees and annual revenue
4. The value of your property and equipment
5. Your claims history
6. The coverages and limits you choose

For more on pricing, see business insurance cost. For real general liability prices by trade, see Tivly's pricing insights.

How Do I Get Small Business Insurance?

Tivly is a licensed insurance agency that matches small businesses with partners. Here's how it works:

1. Tell us about your business in the form above.
2. A Tivly specialist will reach out to match you with a licensed partner.
3. Review your small business insurance quote with one of Tivly's 450+ partners.

Looking for coverage for a specific trade? Browse insurance by industry.

Reviewed By: Sarah Reid, Licensed Agent