One lawsuit, injury or fire can cost a small business more than it earns in a year. Small business insurance protects your company, your income and often your personal assets from those risks. This guide explains the main types of coverage, which ones you may be required to carry and how to get the right policy without overpaying.
What is small business insurance?
Small business insurance is a group of commercial policies that protect a company against financial losses from lawsuits, property damage, employee injuries, vehicle accidents and other risks. Most businesses combine two or three policies, depending on their industry, size and contracts.
The main types of business insurance
- General liability insurance: covers third-party bodily injury, property damage and advertising injury claims.
- Professional liability insurance: also called errors and omissions (E&O), covers claims that your advice or services caused a client financial loss.
- Workers’ compensation insurance: pays medical bills and lost wages for employees injured on the job. Required for employers in most states.
- Commercial property insurance: protects your building, equipment, inventory and furniture.
- Business owner’s policy (BOP): bundles general liability and commercial property, usually at a lower price than buying them separately.
- Commercial auto insurance: covers vehicles used for business.
- Tools and equipment insurance: protects portable tools and gear that move between job sites.
Which policies does your business need?
Start with what is required, then add what protects you from your biggest risks:
- Required by law: workers’ compensation if you have employees (rules vary by state) and commercial auto if your business owns vehicles.
- Required by contracts: landlords, clients and general contractors often require general liability and a certificate of insurance (COI) before you start work.
- Recommended: professional liability for consultants and service providers, property coverage if you own equipment or inventory.
How much does small business insurance cost?
Prices depend on your industry, location, revenue, payroll, number of employees, claims history and the limits you choose. A home-based consultant and a roofing contractor can pay very different premiums for the same type of policy. Read our guide to small business insurance costs to understand what drives your price.
How to get small business insurance
- List your risks: clients, employees, vehicles, equipment, property and contracts.
- Check your state’s requirements and any contract requirements.
- Choose limits and deductibles that protect your assets.
- Compare quotes for the same coverage from several insurers.
- Download your certificate of insurance and keep it ready for clients.
Get a small business insurance quote online
NEXT Insurance offers online quotes for general liability, professional liability, workers’ comp, commercial auto and more, with instant certificates of insurance.
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Frequently asked questions
Is business insurance required by law?
Not all types. Workers’ compensation is required for employers in most states, and commercial auto is required for business-owned vehicles. Other coverage is often required by clients, landlords or lenders.
Can I buy business insurance online?
Yes. Several insurers, including NEXT, let you get a quote, buy a policy and download a certificate of insurance online.
Does my homeowners policy cover my home business?
Usually only in a very limited way, if at all. Business equipment, client injuries and business liability are typically excluded or capped.
Related business insurance guides
This page is for general information only and is not insurance, legal or tax advice. Requirements, coverage and prices vary by state, industry and insurer. Review policy documents and speak with a licensed agent before buying.