Business Insurance Basics

Business insurance is one of the most important — and most overlooked — parts of running a company. Accidents, lawsuits, property damage, theft, and injuries can strike any business, large or small, and without proper coverage a single claim or lawsuit could significantly impact your business finances or operations.

Why Business Insurance Matters

Some types of business insurance may be required by law depending on your state, industry, and business structure — workers' compensation insurance, for example, is often required when you have employees. Other coverages may not be legally required but may be required by landlords, lenders, clients, or contracts.

Common Types of Coverage

General liability insurance helps protect your business if someone claims bodily injury, property damage, or personal and advertising injury caused by your business operations. Professional liability insurance — sometimes called Errors & Omissions (E&O) insurance — helps protect businesses that provide professional services or advice. A Business Owners Policy (BOP) combines several common coverages into one convenient policy, typically general liability and commercial property insurance, and may be more affordable than purchasing each coverage separately.

Home-Based Businesses Are Not Exempt

Home-based businesses face many of the same risks as businesses operating from commercial locations, and business equipment, inventory, customer visits, and professional services may not be adequately covered under a standard homeowners insurance policy. In most cases, personal homeowners and auto insurance policies provide limited or no coverage for business-related activities.

Reviewing Your Coverage

The amount of insurance you need depends on your industry, revenue, number of employees, property value, services provided, contractual requirements, and potential liability risks. Review your coverage at least annually — and whenever significant changes occur, such as hiring employees, purchasing equipment, moving locations, expanding services, or acquiring additional property. A qualified insurance professional can help you identify gaps in coverage and build a policy package that fits your business.