The protections you get from choosing a business structure like a limited liability company (LLC) or a corporation typically only protect your personal property from lawsuits, and even that protection is limited.
Business insurance can fill in the gaps to make sure both your personal assets and your business assets are fully protected from unexpected catastrophes.
In some instances, you might be legally required to purchase certain types of business insurance.
The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance.
Some states also require additional insurance. Laws requiring insurance vary by state, so visit your state’s website to find out the requirements for your business.
After you purchase insurance that’s required by law, you can find insurance to cover any other business risk. As a general rule, you should insure against things you wouldn’t be able to pay for on your own.
Speak to insurance agents to find out what kinds of coverage makes sense for your business, and compare terms and prices to find the best deal for you. Here are six common kinds of business insurance to look for:
Who it’s for
What it does
General liability insurance
This coverage protects against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.
Product liability insurance
Businesses that manufacture, wholesale, distribute, and retail a product
This coverage protects against financial loss as a result of a defective product that causes injury or bodily harm.
Professional liability insurance
Businesses that provide services to customers
This coverage protects against financial loss as a result of malpractice, errors, and negligence.
Commercial property insurance
Businesses with a significant amount of property and physical assets
This coverage protects your business against loss and damage of company property due to a wide variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism.
Home-based business insurance
Businesses that are run out of the owner’s personal home
Coverage that’s added to homeowner’s insurance as a rider can offer protection for a small amount of business equipment and liability coverage for third-party injuries.
Business owner’s policy
Most small business owners, but especially home-based business owners
A business owner’s policy is an insurance package that combines all of the typical coverage options into one bundle. They simplify the insurance buying process and can save you money.