Three things drive what you need: what could go wrong in your particular trade, what your contracts and lease require you to carry, and what your state mandates. The first is judgement; the second and third are simply lookups, and they set your floor.
The main policies
| Policy | Responds to | Typically required by |
|---|---|---|
| General liability | Third-party bodily injury, property damage, and personal or advertising injury | Landlords, clients, event organisers |
| Commercial property | Damage to your own building, stock, equipment and fit-out | Lenders; landlords for tenant improvements |
| Workers compensation | Employee injury and illness — medical costs and lost wages | State law, in almost every state |
| Commercial auto | Vehicles owned or used by the business | State law for owned vehicles |
| Professional liability (E&O) | Financial loss from your advice, design or professional service | Client contracts; licensing boards in some professions |
| Cyber liability | Data breach response, notification costs, extortion, some business interruption | Clients handling sensitive data |
| Business interruption | Lost income while you cannot trade after a covered property loss | Often bundled; check the trigger |
| Employment practices (EPLI) | Claims of discrimination, harassment or wrongful termination | Becomes relevant as headcount grows |
The gaps that surprise people
If you install something badly and it fails, the damage to surrounding property may be covered, but the cost of redoing your own defective work generally is not. That is a separate consideration, and for professional services it is professional liability rather than general liability that responds.
- Personal auto excludes business use. Using your own car for deliveries or client visits can fall outside your personal policy. Hired and non-owned auto cover addresses employees using their own vehicles for work.
- Homeowners excludes business property. Equipment and stock at home are usually not covered, or only to a token limit. Running a business from home generally needs its own arrangement.
- Flood and earthquake are usually excluded from standard property policies and need separate cover.
- Business interruption normally requires physical damage to trigger. It is not a general revenue-loss policy.
- Professional liability is usually claims-made. It responds to claims made while the policy is live, not to work done while it was live. If you switch or cancel, ask about the retroactive date and tail cover.
What a BOP bundles
A business owner's policy packages general liability with commercial property, and usually some business interruption, at a lower combined cost than buying them separately. It is aimed at smaller, lower-hazard businesses and there are eligibility limits on size and industry.
A BOP does not include workers compensation, commercial auto, professional liability or cyber. Those are added by endorsement or bought separately, and assuming otherwise is a common gap.
Reading a policy without reading all of it
-
Check the limits, both of them
Per-occurrence and aggregate. The aggregate is the total for the policy period — several moderate claims can exhaust it and leave you uninsured for the rest of the year.
-
Read the exclusions first
Exclusions define the policy more precisely than the insuring agreement. If a specific risk is central to your trade, confirm in writing it is not excluded.
-
Find out whether defence costs erode the limit
In some policies legal defence is paid in addition to the limit; in others it comes out of it. The difference is substantial in a contested claim.
-
Check replacement cost versus actual cash value
Actual cash value deducts depreciation. For equipment that matters, replacement cost is usually worth the difference in premium.
-
Match your certificates to your contracts
Leases and client agreements often specify minimum limits and require being named as an additional insured. Check your certificate actually says what the contract demands before you need it to.
Questions owners ask
Does an LLC mean I do not need insurance?
No. An entity can limit which assets are exposed; it does not pay claims, fund a legal defence, or satisfy a landlord or client that requires cover. The two do different jobs and most businesses need both.
I work alone. Do I need workers compensation?
Requirements usually attach to employees, and owners are often excluded or able to opt out. Two caveats: rules differ by state and entity type, and clients or general contractors frequently require a policy or a formal exemption certificate before they will let you on site.
How much general liability is normal?
Contracts and leases commonly specify the minimum, and that is the practical answer for most small businesses. Beyond the required floor, the right level depends on your exposure and assets — a broker who knows your trade is better placed than a general rule of thumb.
Where to check
- SBA — get business insurance
- Your state department of insurance, for licensed carriers and complaint records
- Your lease and client contracts, for the limits you are actually required to carry