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Top Small Business Insurance Types
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Top Insurance Types for Small Businesses | Small Business Resources

What types of insurance coverage do you need for your small business? Here’s a look at the 6 top types of small business insurance.
Top Insurance Types for Small Businesses | Small Business Resources

As a small business owner, you know not everything goes according to plan. For better or worse: things happen. Of course, “expecting the unexpected” truly is a valuable attribute for any entrepreneur—and having the right type of insurance coverage goes a long way towards mitigating risk and building success. It’s wise (and in many cases, legally required) to carry certain types of insurance for your small business. Here’s an overview of the 6 main types of small business insurance you’ll likely need, and we’ve included a few other insurance types you may want or need based on your industry.

Group health insurance

Health insurance is one of the most common types of insurance that small business owners purchase for their employees. According to data from the Kaiser Family Foundation (KFF), around 49 percent of the United State’s total population receive employer-sponsored health insurance (also called group health insurance).

If a small business has fewer than fifty employees, offering group health insurance is optional. That said, providing health insurance to your small business workforce is recommended regardless of size—it may even give you the competitive advantage over other employers who do not provide insurance.

Popular types of health insurance include medical, dental, vision, and disability coverage for employees.

Workers’ compensation insurance

Workers’ compensation insurance, also called workman’s compensation or workers’ comp is a state-mandated insurance program that helps provide medical, disability, survivor, burial, and rehabilitation benefits to employees who are injured or killed due to work-related injury or illness.

Workers’ comp insurance helps cover medical care and rehabilitation costs if any of your team members are injured in the workplace, as well as lost wages and death benefits caused by accidents at work. In return, your team members give up the right to sue you for potential on-the-job negligence due to a workplace incident.

In nearly all states and with few exceptions, as a business owner, you are required by law to carry workers’ compensation insurance.

General liability insurance

General liability insurance helps protect your small business from claims involving property damage and bodily injuries. Sometimes called business liability insurance and commercial general liability insurance, this type of coverage helps cover costs like attorney fees and medical expenses for incidents involving your services, products, or operations. General liability insurance can also help cover advertising and personal injury claims for issues including libel, slander, and copyright infringement.

General liability insurance is one of the most common types of insurance businesses carry. Typically, small business owners must show proof of insurance to enter into commercial leases and customer contracts. If your small business sells products, offers services, rents space, or advertises online, you likely need general liability coverage. Whether your business serves customers on job sites, at their property, or at your own location—general liability coverage can help protect your valuable commercial and personal assets.

Business property insurance

Also called commercial property insurance, business property insurance is often bundled into what is called a business owner’s policy (BOP).

Business property insurance helps protect your building and its contents. This type of insurance helps safeguard against storms, burst pipes, fire, explosions, theft, vandalism, and more. However, it doesn’t typically cover floods or earthquakes—both those features may typically be added to the coverage for additional costs.

Commercial automobile insurance

Commercial auto insurance helps protect your small business from liability and physical damage related to your company’s automobiles. Whether you use your work vehicles to make deliveries, haul equipment, convey clients, or run errands—you need adequate commercial vehicle coverage. From company cars and work vans to utility vehicles and box trucks, insuring all of your business vehicles means your business may be better protected from unexpected incidents that could harm your employees, your property, or a third party.

Commercial automobile insurance helps cover bills if an employee or a third party experiences injury or death from an auto accident. It can help your employees’ families by covering lost wages and medical expenses and can help protect a business from accident-related lawsuits.

Cyber insurance

Cyber insurance helps protect your small business from damage, liability, and recovery costs in the event that your computer system or electronic data has been compromised. Alternatively referred to as cyber liability insurance, cyber risk insurance, or cybersecurity insurance, this type of coverage can help protect your employees and your customers from computer hackers and other electronic threats.

If your small business handles any sensitive information, such as your employees’ drivers’ licenses and social security numbers or your customers’ credit cards or bank account information, you may be a target for cyber criminals. Cybercriminal activity is only increasing over time and adequate cyber insurance coverage is one key step in guarding your business’s valuable and confidential information.

Cyber insurance is designed to protect your small business for issues like stolen or exposed computer data, employee or customer identity theft, cyber extortion, data recovery, and more. Types of coverage in cyber insurance policies vary upon your small business needs but may include first-party coverage and third-party coverage.

Other types of small business insurance

There are also other kinds of insurance that can be catered to your specific small business needs—and these can even be bundled alongside other types of insurance into a business owner’s policy (BOP).

These can include professional liability insurance (errors and omissions insurance), a commercial umbrella policy, directors and officers liability insurance, employment practices liability insurance, and terrorism insurance. Also, you can obtain industry-specific insurance such as equipment coverage for gyms and spas, product recall coverage or spoilage insurance for food and beverage businesses, builders risk insurance for construction businesses, and more.

Thanks for reading our educational resource! If you’re a small business owner, see more small business resources or get a workers’ compensation rate in 3 minutes.