Updated 27 March 2026
Types of Business Insurance
Most small businesses need 2-3 types. General liability and a BOP cover 80% of risks. Add workers comp if you have employees. Add cyber if you handle data.
1. General Liability (GL)
Almost always
Third-party bodily injury, property damage, advertising injury. If a customer slips in your store or your product injures someone.
Real example
Customer trips over a cord in your office. GL covers their medical bills and your legal defence.
2. Professional Liability (E&O)
If you give advice or services
Errors, omissions, negligence in professional services. If your advice or work causes a client financial loss.
Real example
An accountant files a tax return incorrectly, costing the client $50K in penalties. E&O covers the claim.
3. Workers Compensation
Required in 49 states (not TX)
Employee injuries and illnesses on the job. Medical bills, lost wages, rehabilitation, death benefits.
Real example
Warehouse worker injures their back lifting boxes. Workers comp covers medical treatment and 60-66% of lost wages.
4. Business Owners Policy (BOP)
Recommended for small businesses
Bundles GL + commercial property + business interruption at a discount (15-20% cheaper than separate policies).
Real example
A fire damages your office. BOP covers rebuilding costs, lost equipment, AND revenue lost while closed.
5. Commercial Property
If you own/lease physical space
Building, equipment, inventory, furniture against fire, theft, weather, vandalism.
Real example
Burst pipe floods your retail store, destroying $30K in inventory. Commercial property covers replacement.
6. Cyber Liability
If you store customer data
Data breaches, ransomware, notification costs, legal fees, regulatory fines, credit monitoring for affected customers.
Real example
Hackers steal 10,000 customer credit cards from your e-commerce site. Cyber insurance covers notification, monitoring, and lawsuits.
7. Directors & Officers (D&O)
If you have a board or investors
Personal liability of directors/officers for decisions that harm the company, shareholders, or employees.
Real example
Shareholders sue the board for a merger that lost value. D&O covers legal defence and settlement.
The minimum for most small businesses:
A Business Owners Policy (BOP) at $500-$3,500/year covers general liability, property, and business interruption in one policy. Add workers comp if you have employees. Add cyber liability if you process payments or store customer data online. Total: $1,500-$8,000/year for comprehensive coverage.