Business Insurance Checklist: Every Policy a Small Business Needs
The complete small business insurance checklist: general liability, professional liability, commercial property, workers comp and more, with typical costs.
Table of contents
One lawsuit can wipe out a small business faster than anything else. Yet a surprising number of owners skip insurance or buy the bare minimum. This checklist walks through every policy you should consider — and why each one matters.
1. General Liability Insurance
The foundation of business protection. It covers third-party claims of:
- Bodily injury (a customer slips in your store)
- Property damage (you damage a client’s property)
- Personal and advertising injury (defamation, copyright claims)
Typical cost: $300–$1,000/year for a small business. For many operations, this is the single most important policy you’ll buy.
2. Professional Liability (Errors & Omissions)
Protects against claims that your professional advice or services caused a client financial loss. Essential if you provide services or advice — consultants, accountants, real estate agents, designers and IT professionals.
Typical cost: $500–$2,500/year depending on your field and revenue.
3. Commercial Property Insurance
Covers your business property — the building, equipment, inventory and furniture — against fire, theft, vandalism and weather damage. Renters need it too; your landlord’s policy doesn’t cover your equipment.
Typical cost: $500–$1,500/year for modest coverage.
4. Business Interruption Insurance
Often bundled into a BOP, this replaces lost income and covers operating expenses when a covered disaster forces you to close temporarily.
Example: A fire closes your bakery for six weeks. Business interruption pays your lost profits and continuing costs like rent and payroll.
5. Workers’ Compensation Insurance
Required in most states once you have employees. Covers medical expenses and lost wages for employees injured on the job, and protects you from injury-related lawsuits.
Typical cost: 0.25%–4% of payroll depending on industry (higher for construction, lower for office work).
6. Commercial Auto Insurance
Required for any vehicle owned or used by your business. Personal auto policies explicitly exclude business use, so this is non-negotiable if you drive for work.
7. Cyber Liability Insurance
Data breaches can cost small businesses $50,000 to $200,000+ in fines, notification and recovery costs. Cyber insurance covers breach response, legal defense and business interruption from a breach.
Typical cost: $1,000–$3,000/year, growing in importance every year.
8. Umbrella Insurance
Sits on top of your other liability policies and adds an extra layer of protection — typically $1 million — at a modest cost. When the limit on your general liability is exhausted, the umbrella kicks in.
Typical cost: $400–$800/year for $1 million in extra coverage.
Other policies to consider
- Directors & Officers (D&O) — for corporations, protects board members against decisions-related lawsuits.
- Employment Practices Liability (EPLI) — covers discrimination and wrongful termination claims.
- Product Liability — essential if you manufacture or sell physical products.
- Equipment breakdown — covers repairs to essential machinery.
- Key person insurance — a life policy on the owner whose death would cripple the business.
Which policies does YOUR business need?
| Business type | Must-have policies |
|---|---|
| Consultant / freelancer | Professional liability, cyber |
| Retail / restaurant | General liability, commercial property, workers comp |
| Contractor / trades | General liability, workers comp, commercial auto, tools coverage |
| Online business | General liability, cyber, product liability |
| Healthcare / legal | Professional liability, general liability, cyber |
The smart buying strategy
- Start with a Business Owner’s Policy (BOP) — it bundles general liability, property and business interruption at a discount. Most small businesses can start here.
- Add industry-specific coverage — professional liability, cyber or workers comp as applicable.
- Buy an umbrella once your revenue and assets grow.
- Compare at least three carriers — premiums for identical coverage differ substantially.
- Review annually — as you add employees, vehicles or revenue, your coverage needs change.
Bottom line
For most small businesses, a BOP plus professional liability and workers comp covers 90% of the real risks. Don’t skip general liability to save $50 a month — one claim can end your business. Start with the coverage that protects the assets you can’t replace, then add layers as you grow.
Insurance needs more clarity around what drives your premiums and how to compare quotes across providers.
