Business insurance is a financial safety net against unforeseen damages that happen during commercial operations. Depending on the types of coverage you choose, the items covered differ and you can modify your per occurrence (select types) and per year limits to fit your needs.
Business Insurance Coverage
Business insurance coverage is a necessity, and main types include general liability, workers comp, professional liability and commercial auto.
Get matched with the right business insurance coverage for you below.
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Updated: October 27, 2025
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Key Takeaways
Most business insurance coverage protects you up to a per occurrence and aggregate per year limit for damages associated with commercial operations.
Most states and contracts require business insurance coverage, typically including general liability, workers comp, commercial auto, and professional liability insurance.
Most small businesses need BOP insurance which combines general liability, commercial property and business interruption insurance coverage.
What Is Business Insurance?
What Does Business Insurance Cover?
Business insurance can cover financial losses from liability claims, property damage, employee injuries, and business interruptions. It is also able protect against cyber incidents, professional mistakes, key personnel loss, criminal activities, and regulatory violations that could significantly impact your company's operations and finances. The specific terms and conditions of your coverage vary based on the types you choose to purchase.
Types of Business Insurance Coverage
Below, we've summarized the types of business insurance coverage you can purchase, their limit structures, and the businesses areas who need it:
Third-party injury claims, property damage to others, advertising injury lawsuits, and associated legal costs | Per occurrence limit / Annual aggregate limit (e.g., $1M per occurrence, $2M aggregate) | All businesses with customer interaction, retail stores, restaurants, service providers, contractors | |
Physical business assets including buildings, equipment, inventory, and lost income when property damage forces temporary closure | Building limit / Contents limit / Business income limit (actual cash value or replacement cost basis) | Manufacturing, retail, warehousing, restaurants, offices with significant equipment/inventory | |
Medical care, wage replacement, disability benefits, and death benefits for employees injured or killed on the job | Statutory benefits per state requirements / Unlimited medical / Percentage of wages for disability | All businesses with employees (required by law in most states), especially construction, manufacturing, healthcare | |
Vehicle damage, liability for accidents involving company vehicles, medical payments, and rental car expenses | Combined single limit or split limits for liability / Actual cash value or stated amount for physical damage / Per person/per accident for medical payments | Delivery services, trucking companies, sales teams, contractors, any business using vehicles for work | |
Claims of professional negligence, service errors, and misrepresentation in your professional work | Per claim limit / Annual aggregate limit / Defense costs may be inside or outside limits | Doctors, lawyers, accountants, consultants, architects, engineers, financial advisors, IT professionals | |
Data breaches, cyber attacks, ransomware, business interruption from digital incidents, and regulatory penalties | Per incident limit / Annual aggregate limit / Separate sub-limits for different coverage types | Healthcare, financial services, e-commerce, tech companies, any business handling sensitive customer data | |
Lost income and ongoing expenses when your business is temporarily shut down due to covered disasters | Actual loss sustained basis / Maximum indemnity period (e.g., 12-24 months) / Monthly limit of indemnity | Manufacturing, retail, restaurants, any business dependent on physical location or continuous operations | |
Employee lawsuits including wrongful termination, discrimination, harassment, and wage disputes | Per claim limit / Annual aggregate limit / Defense costs typically outside limits | All businesses with employees, especially larger employers, healthcare, hospitality, financial services | |
Personal liability protection for company leaders from management decisions and shareholder lawsuits | Per claim limit / Annual aggregate limit / Separate limits for entity vs. individual coverage | Public companies, private companies with outside investors, nonprofits, banks, healthcare organizations | |
Additional liability coverage beyond your primary policies for catastrophic claims | Single limit per occurrence / Annual aggregate limit (typically $1M-$10M+ increments) | High-risk businesses, contractors, manufacturers, any business with significant liability exposure | |
Injuries and property damage caused by defective products you manufacture or sell | Per occurrence limit / Annual aggregate limit / May include product recall expense limit | Manufacturers, importers, distributors, retailers selling physical products, food and beverage companies | |
Financial losses when critical employees die or become disabled | Face amount per insured person / May include disability income benefits | Small businesses dependent on owners/key employees, startups, professional practices, family businesses | |
General liability and property coverage with business interruption protection in a single package | Combined limits for liability / Separate property limits / Business income limit based on actual loss | Small to medium businesses, offices, retail stores, restaurants, service businesses | |
Employee theft, fraud, forgery, robbery, and other criminal acts targeting your business | Per occurrence limit for each type of crime coverage / Annual aggregate may apply | Banks, retail businesses, businesses handling cash, companies with access to customer funds | |
Breaches of duty in managing employee benefit plans and ERISA violations | Per claim limit / Annual aggregate limit / Defense costs may be included or separate | Companies with employee benefit plans (401k, health insurance), plan administrators, trustees | |
Overseas operations including foreign liability, political risks, and currency fluctuations | Varies by coverage type / Territory-specific limits / May include blanket worldwide coverage | Multinational corporations, exporters/importers, companies with overseas offices, international contractors | |
Cargo, vessels, and related liability during transportation and storage | Per voyage or annual policy / Agreed value for cargo / Hull value for vessels | Shipping companies, importers/exporters, freight forwarders, port operators, vessel owners | |
Aviation Insurance | Aircraft damage, aviation liability, and specialized risks for businesses that own or operate aircraft | Hull value for physical damage / Combined single limit for liability / Per passenger limits | Airlines, charter services, aircraft manufacturers, airports, businesses owning corporate aircraft |
Environmental Liability Insurance | Pollution cleanup costs, environmental damage claims, and regulatory compliance expenses | Per claim limit / Annual aggregate limit / Cleanup cost limits may be separate | Manufacturing, chemical companies, gas stations, dry cleaners, waste management, construction |
Trade Credit Insurance | Customer payment defaults and international trade risks | Credit limit per buyer / Annual aggregate limit / Percentage of loss covered (typically 85-95%) | Exporters, manufacturers with large accounts receivable, companies extending credit terms |
Supply Chain Insurance | Disruptions from supplier failures, transportation delays, and raw material price volatility | Per event limit / Annual aggregate limit / Waiting period before coverage kicks in | Manufacturing, automotive, electronics, retail chains, businesses with complex supply chains |
Intellectual Property Insurance | Patent, copyright, and trademark infringement claims and enforcement costs | Per claim limit / Annual aggregate limit / Defense costs may be separate or included | Technology companies, software developers, pharmaceutical companies, media companies, inventors |
Event Cancellation Insurance | Lost revenue and expenses when business events are cancelled due to covered circumstances | Sum insured based on projected revenues/costs / May include additional expense coverage | Event planners, entertainment venues, sports organizations, trade show companies, wedding planners |
Equipment Breakdown Insurance | Mechanical failures, spoilage, and business interruption when critical equipment breaks down | Per accident limit / Annual aggregate limit / Business income and extra expense sub-limits | Manufacturing, data centers, hospitals, restaurants, any business dependent on specialized equipment |
Contract performance, license compliance, and employee honesty through financial backing | Bond penalty amount (face value) / May have annual aggregate for fidelity bonds | Construction contractors, government contractors, auto dealers, mortgage brokers, licensed professionals | |
Terrorism Insurance | Property damage and business interruption resulting from certified terrorist attacks | Per occurrence limit / Annual aggregate limit / Separate limits for property vs. business income | High-profile businesses, major metropolitan areas, critical infrastructure, large commercial properties |
Kidnap and Ransom Insurance | Ransom payments, crisis response, and security services for businesses with overseas exposure | Per incident limit / Annual aggregate limit / Sub-limits for different types of expenses | Multinational corporations, businesses operating in high-risk countries, executive protection services |
Business Travel Insurance | Medical coverage, evacuation services, and trip-related expense reimbursement for traveling employees | Per person limits / Per trip limits / Annual aggregate limits / Medical expense sub-limits | Companies with frequent business travel, international operations, sales teams, consulting firms |
Contingent Liability Insurance | Liability you assume through contracts, indemnification agreements, and subcontractor relationships | Per occurrence limit / Annual aggregate limit / May mirror underlying policy limits | Contractors, joint ventures, companies using subcontractors, businesses with indemnity agreements |
Technology Insurance | Software errors, system failures, data restoration, and technology-related liability claims | Per claim limit / Annual aggregate limit / Separate limits for different coverage components | Software companies, IT service providers, SaaS companies, technology consultants, app developers |
Clinical Trials Insurance | Participant injuries, product liability, and regulatory investigation costs during medical trials | Per participant limit / Per study limit / Annual aggregate limit / Legal expense sub-limits | Pharmaceutical companies, medical device manufacturers, research organizations, hospitals conducting trials |
Coverage for claims made after a claims-made policy expires, covering incidents that occurred during the policy period | Extended reporting period length (1-6 years or unlimited) / Same limits as expired policy / One-time premium payment | Professional service providers switching insurers, retiring professionals, businesses ending claims-made policies | |
Theft, damage, or loss of specialized tools and equipment used in business operations | Scheduled item limits or blanket coverage / Replacement cost or actual cash value / May include rental reimbursement | Contractors, electricians, plumbers, mechanics, landscapers, photographers, musicians, mobile service providers | |
Claims arising from serving alcohol to intoxicated patrons who cause injury or property damage | Scheduled item limits or blanket coverage / Replacement cost or actual cash value / May include rental reimbursement | Bars, restaurants, breweries, nightclubs, liquor stores, event venues, any business serving alcohol | |
Livestock Insurance | Death, injury, or theft of farm animals and livestock during transport or on premises | Per animal value or blanket coverage / Mortality and transit coverage / May include carcass removal | Farmers, ranchers, livestock transporters, veterinary clinics, animal breeding operations, equine facilities |
Farm Liability Insurance | Bodily injury and property damage claims from farming operations and agricultural activities | Per occurrence limit / Annual aggregate limit / Covers farm premises and operations | Farmers, ranchers, agribusiness operations, farm equipment operators, agricultural contractors |
Host Liquor Liability Insurance | Liability for serving alcohol at temporary events where alcohol service is not the primary business | Per event limit / Short-term coverage / Covers bodily injury and property damage | Event hosts, wedding planners, corporate events, private parties, temporary alcohol service |
Coverage for property in transit, mobile equipment, and property away from fixed locations | Scheduled equipment values / All-risk or named perils / May include installation coverage | Construction companies, photographers, mobile service providers, contractors with portable equipment | |
Flood Insurance | Property damage and contents loss from flooding not covered by standard property policies | Building coverage limit / Contents coverage limit / Separate deductibles for each | Businesses in flood zones, coastal areas, near rivers or lakes, any business wanting flood protection |
Earthquake Insurance | Property damage from seismic activity not covered by standard commercial property policies | Building and contents limits / Percentage deductibles / Separate coverage for business interruption | Businesses in seismic zones, California, Pacific Northwest, New Madrid fault area |
Identity Theft Insurance | Expenses related to identity theft recovery for business owners, employees, or customers | Per incident limit / Annual aggregate / Covers legal fees, lost wages, document replacement | All businesses, especially those handling personal data, financial services, healthcare, retail |
Representation and Warranty Insurance | Protection for breaches of representations and warranties in merger and acquisition transactions | Policy limit based on transaction value / Survival period coverage / Covers buyer and seller | Companies involved in M&A transactions, private equity firms, investment banks |
Garage Liability Insurance | Coverage for auto dealers and service facilities for damage to customer vehicles and premises liability | Per occurrence limit / Garage keepers coverage for customer vehicles / On-hook towing coverage | Auto dealerships, repair shops, parking garages, towing companies, auto service centers |
Hired and Non-Owned Auto Insurance | Liability coverage for vehicles not owned by business but used for business purposes | Combined single limit / Extends commercial auto coverage / Covers rental and employee vehicles | Any business whose employees drive personal or rental vehicles for work purposes |
Business Identity Theft Insurance | Protection for businesses against identity theft and fraud targeting the company itself | Per incident limit / Covers investigation, legal costs, business interruption / Credit monitoring | All businesses, especially small businesses, sole proprietors, businesses with online presence |
Do You Need Business Insurance?
In most cases, you will be required to have general liability, workers compensation insurance and commercial auto insurance. However, your legal business insurance coverage requirements will differ widely depending on your industry, stage of your business and more.
To help you understand what is likely required of you to help your search, we've outlined some common scenarios and the coverage that is required or often needed below:
- Having Employees: Workers' Compensation likely required
- Owning business vehicles: Commercial Auto required
- Conducting Business as a Licensed Professional: Professional Liability likely likely required
- Serving Alcohol: Liquor Liability required
- Signing a Lease: General Liability + Property required
- Getting a Business Loan: Property + General Liability required
- Handling Customer Data: Cyber Liability often required
- Being in the Construction or Contracting Industry: Bonds + multiple coverages required
Even when not legally required, you should insure against things you wouldn't be able to pay for on your own. The cost of insurance is typically far less than the potential financial devastation from an uninsured lawsuit, accident or natural disaster. Many businesses without adequate coverage face fines, lawsuits or permanent closure when unexpected events occur.
How Much Business Insurance Do I Need?
Determining how much coverage you need doesn't have to be guesswork. The right amount of business insurance coverage depends on your industry risks, business size and client requirements, and following these guidelines helps ensure adequate protection.
Most small businesses start with $1 million general liability limits. This amount covers typical claims and meets most client contract requirements. Workers' compensation amounts are set by state law.
Consider $1 million liability coverage for commercial auto to match your general liability protection. The same goes for professional liability for consultants, contractors and service providers working with larger clients.
Your coverage needs increase with business assets, revenue and industry risk level. High-risk businesses like construction need higher limits than consulting firms.
Business Insurance Coverage Recommendations by Industry
Every industry has risks, and your insurance needs change depending on your business. A restaurant faces different challenges than a law firm, and a construction company deals with hazards that an accounting practice never encounters.
Getting the right coverage means looking beyond the basic requirements your state mandates. You need protection that matches the real risks your business faces every day.
Construction and Contracting | Construction work comes with serious risks. Heavy equipment can damage property, and workers face constant dangers from falls, electrical hazards and machinery accidents. Weather delays and supply chain problems often lead to contract disputes, while poor workmanship can cost thousands in repairs down the road. | General liability handles property damage and injuries to others. Professional liability covers mistakes in design work and project delays. Workers' compensation pays for job site injuries. Commercial auto protects company vehicles, and equipment coverage safeguards valuable machinery from theft or damage. |
Professional Services | Client relationships depend on expertise, making errors and omissions claims common when advice leads to financial losses. Data breaches expose sensitive client information, while missed deadlines can trigger contract penalties. Employment disputes may arise from hiring, firing, or workplace discrimination claims. | Professional liability insurance covers errors in advice or services that cause client financial harm. Cyber liability protects against data breaches and ransomware attacks. General liability handles slip-and-fall accidents in your office, while employment practices liability covers workplace discrimination and wrongful termination claims. |
Kitchen operations create fire and burn risks, while food preparation exposes businesses to foodborne illness claims. Customer slip-and-fall accidents are common in dining areas, and alcohol service adds liquor liability exposure. Equipment breakdowns can spoil inventory and force temporary closures. | General liability covers customer injuries and property damage, while product liability protects against foodborne illness claims. Liquor liability insurance is essential for establishments serving alcohol. Commercial property coverage protects kitchen equipment and inventory, and business interruption insurance covers lost income during forced closures. | |
Patient care creates malpractice exposure when treatments don't meet expected outcomes or result in complications. Strict privacy regulations make data breaches costly, while medical equipment failures can harm patients. Employment practices claims often arise from healthcare workplace stress and demanding schedules. | Medical malpractice insurance protects against patient care claims and covers legal defense costs. Cyber liability addresses HIPAA violations and patient data breaches. General liability covers non-medical accidents in your facility, while employment practices liability protects against workplace discrimination and harassment claims. | |
Running a retail business means customers are constantly coming and going, which creates plenty of opportunities for slip-and-fall accidents. Product defects can lead to costly liability claims, and thieves target inventory and equipment. If you sell online, you're also dealing with shipping damage and return disputes on top of everything else. | General liability covers customer injuries in your store and product liability for defective merchandise claims. Commercial property insurance protects your inventory and equipment from theft. Cyber liability coverage is essential if you handle customer payment data. Business interruption insurance keeps money coming in if you're forced to close temporarily. | |
Vehicle accidents are your biggest concern, especially when hauling cargo or passengers. Stolen or damaged freight can destroy client relationships, and injured drivers can shut down operations. Don't forget about DOT compliance issues, which can result in hefty fines and force you to park your trucks. | Commercial auto insurance with high limits is non-negotiable for fleet operations. Cargo insurance protects the goods you're transporting from theft and damage. You'll also need general liability for your non-driving business activities and workers' compensation for driver injuries and loading dock accidents. | |
Small Business Insurance Coverage: Bottom Line
Your state probably requires some basic coverage like workers' compensation and commercial auto insurance, and that's your starting point. But meeting the minimum requirements won't protect you from the real financial hits your business could face.
The key is matching your coverage to the risks you face every day. Add specialized policies where needed, and you'll have the financial security to keep your business running when problems arise.
Insurance Coverage for Small Business: FAQ
Have questions about business insurance? We've got answers to the most common ones:
What is business insurance coverage?
Business insurance helps pay for unexpected costs when things go wrong. Whether it's an accident at your business, a lawsuit, property damage or having to shut down temporarily, insurance covers the bills so you don't have to.
Most small businesses get a business owner's policy, or BOP, which bundles general liability, commercial property and business interruption coverage into one package. It's an efficient way to get broad protection without buying separate policies.
What types of business insurance coverage do I need?
Your needs depend on industry, business size and operations. All businesses need general liability insurance. If you have employees, workers' compensation is required in most states. Businesses with vehicles need commercial auto coverage, while those handling customer data should consider cyber liability protection.
Is business insurance coverage required by law?
Yes, several types are mandatory. Almost every state requires workers' compensation for businesses with employees. Commercial auto insurance is necessary, except in New Hampshire and Virginia, if you own vehicles. Professionals like real estate agents and lawyers need professional liability to maintain their licenses.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.