“A good insurance policy won’t make your business successful, but it can keep it from failing.” – Anonymous
What Types Of Insurance Does A Small Business Need?: Running a small business is rewarding—but it’s not without risk. From customer injuries to data breaches and natural disasters, unexpected events can disrupt operations and hurt your bottom line. That’s where business insurance comes in. If you’re wondering, “What types of insurance does a small business need?”, this blog explores essential policies every small business should consider, backed by expert insights and real-world data.
Common Types Of Insurance Small Businesses Need
Here are the core types of insurance that most small businesses should consider:
1. General Liability Insurance
Protects against third-party bodily injury, property damage, and personal injury claims like slander or libel. This is foundational coverage for nearly every business type.
📊 According to Insureon, more than 60% of small businesses carry general liability insurance as their first coverage.
2. Commercial Property Insurance
Covers the physical assets of your business—like buildings, equipment, inventory, and furniture—against risks like fire, theft, and vandalism.
3. Business Interruption Insurance
If your business is forced to shut down temporarily due to a covered event (like a fire or flood), this insurance helps cover lost income and ongoing expenses.
📈 In 2022, business interruption losses exceeded $150 billion globally, according to Investopedia.
4. Professional Liability Insurance
Also called Errors and Omissions (E&O) insurance, it protects against claims of negligence, poor work, or missed deadlines—especially important for consultants and service providers.
5. Workers’ Compensation Insurance
Mandatory in most U.S. states, this covers medical costs and lost wages for employees injured on the job. Even if you’re a sole proprietor, it’s crucial if you hire help.
6. Cyber Liability Insurance
Covers your business in the event of a data breach or cyberattack. This includes customer notifications, legal costs, and restoring compromised data.
💻 According to Shopify, 43% of cyberattacks target small businesses, but only 14% are prepared.
7. Business Owner’s Policy (BOP)
A bundled plan combining general liability and commercial property insurance—ideal for small businesses looking for broad coverage at a lower premium.
8. Product Liability Insurance
Important for businesses that manufacture or sell products. It protects against claims of injury or damage caused by faulty products.
FAQs
What Is The Most Important Insurance For Small Businesses?
General liability insurance is often considered the most essential, as it covers common risks like injury and property damage.
Do I Need Insurance If I Work From Home?
Yes, home-based businesses still need coverage for client interactions, equipment, and professional liabilities.
How Much Does Small Business Insurance Cost?
Costs vary by industry, location, and coverage. On average, small businesses pay $42–$65/month for general liability.
What Is Business Interruption Insurance?
It covers lost income and expenses if your business can’t operate due to covered events like fire or natural disasters.
Is Cyber Insurance Worth It For A Small Business?
Yes, especially if you store customer data. Cyberattacks cost small businesses an average of $200,000 per breach.
Can I Combine Multiple Policies?
Yes. A Business Owner’s Policy (BOP) bundles general liability and property insurance for cost savings and convenience.
What Type Of Insurance Do Freelancers Need?
Freelancers often need professional liability, general liability, and sometimes cyber insurance, depending on their services.