Do I Need Insurance for My New Small Business?
If you’re a small business owner, obtaining the necessary insurance is a vital part of your operations to stay protected against the many risks your business faces.

Not only is insurance generally required by law in most states, but it can also be required by clients or specific contracts.

Most importantly, it’s crucial to practice prudence by purchasing the correct insurance, because you can never fully anticipate losses. Without proper insurance in place, you are putting yourself and your business at significant risk.

Significant losses can occur for many reasons, including property damage to or within commercial buildings, on-road accidents for those using commercial vehicles, employee injuries, theft, data breaches, liability claims, and natural disasters.

Unless you want to be personally liable for losses, starting a new small business means you will definitely need business insurance. There are many ways to find what you require to stay properly insured and protect your assets. Begin by listing your responsibilities and risks. Consider general liabilities, property, employees, vehicle use, and how much personal risk you have in your business structure (e.g., sole proprietorship or LLC).

Business insurance is not only important but vital to the success of any small business. It is not optional.

Which Types of Business Insurance Do I Need for My New Business?

Several factors affect what types of insurance your business may need, including the type of work and industry. For example, if you work in landscaping, you may need coverage for pollution caused by pesticides. If you’re a lawyer, you will require a different set of coverages.

The number of employees and customers also matters. If you employ many people, you will likely need a larger amount of Workers’ Compensation insurance to protect yourself and your workers in case of injury.

If your business deals with intellectual property, tech startups need Liability insurance that covers theft or damage to intangible assets like ideas not protected by copyright or patents.

The amount of property and equipment your business owns is another important factor. If your business depends heavily on equipment or property—such as forklifts, vehicle fleets, or construction machinery—insuring these assets against fire, theft, loss, or negligence is highly recommended.

Different Liability insurance types cover various risks, but you may not need every kind of commercial insurance available.

As your business grows, your insurance needs may evolve. You might add or reduce coverage depending on your business’s life cycle.

Main Insurance Types You Should Consider

When buying business insurance, the main types of coverage you should consider often depend on your business specifics. Some types are essential for nearly every business or industry. These include:

General Liability
One of the most common and important insurance policies, General Liability protects your business from lawsuits brought by third parties such as customers. It covers bodily injury, property damage, and advertising liabilities like libel or defamation. Common examples include a customer slipping on a wet floor, property damage caused by an employee, or lawsuits related to social media advertising claims.

Workers’ Compensation
Protects your employees if they get injured or sick on the job. It covers medical expenses, recovery costs, missed wages, funeral expenses in case of death, and legal costs if your business faces lawsuits related to workplace injuries. Most states require Workers’ Compensation insurance by law.

Professional Liability (Errors & Omissions)
Also called Malpractice insurance, this is important for businesses offering professional services like lawyers, architects, therapists, and doctors. It covers claims related to mistakes, breaches of contract, and legal defense costs.

Business Owner’s Policy (BOP)
A bundled insurance package that includes property coverage (for buildings and business property) and some General Liability protections. It can also cover business interruptions, helping you continue operations if your business is temporarily shut down. BOPs are customizable to fit your business needs.

Cyber Liability
Covers risks related to cyberattacks, data breaches, identity theft, loss of income due to cyber incidents, and damage to your reputation. This insurance is increasingly important in the digital age.

Commercial Auto
If your business uses vehicles (delivery cars, taxis, service trucks), personal auto insurance won’t cover business-related accidents. Commercial Auto insurance is legally required and protects your business from losses related to vehicle use.

Differences Between Coverage Types

Understanding the distinctions between policies is critical to choosing the right insurance.

Workers’ Compensation covers your employees’ injuries and related costs. General Liability covers your business from lawsuits involving bodily injury, property damage, or advertising claims.

BOP packages General Liability with property insurance and can be customized. General Liability policies alone cannot be tailored with property coverage.

Professional Liability protects against lawsuits from your professional services. General Liability covers bodily injury and property damage, often related to physical business premises or operations.

Benefits of Business Insurance

Obtaining business insurance offers several benefits:

Damage coverage helps with repair or replacement costs for property damage or injury caused by your business or external factors.

Business reputation benefits because having insurance allows you to compensate affected parties and maintain good relationships, avoiding damaged reputations.

Business continuity is supported because insurance helps you repair damage or replace resources so your business can keep operating after incidents.

Risk-sharing means insurance spreads the financial burden of losses so you don’t bear the full impact, helping avoid business bankruptcy.

How Much Does Business Insurance Cost?

Costs vary based on factors such as the types of insurance you buy, your industry and business risk profile, business location (risk of natural disasters or theft), and size of your business and number of employees.

Larger businesses or those in riskier industries typically pay higher premiums.

How Do You Get Business Insurance?

The process is similar to personal insurance:

1. Assess your insurance needs based on your business type, size, and risks.

2. Gather your business documentation, such as identification numbers and claim history.

3. Prepare details like employee count and physical locations.

4. Consider different coverage levels by envisioning potential scenarios and losses.

By working with insurers or brokers, you can find policies tailored to protect your business adequately.