Business insurance protects a company from financial loss caused by accidents, claims and interruptions. What you need depends on what the business does, who it serves and what it owns.
The main kinds
- Commercial general liability. Pays if someone says your business caused them injury or property damage.
- Commercial property. Covers your building, equipment, inventory and tenant improvements after a covered loss.
- Business interruption. Replaces income and covers ongoing expenses while you cannot operate after a covered loss.
- Professional liability (errors and omissions). For businesses that give advice or deliver a professional service. It responds to claims of mistakes or negligence.
- Cyber. Costs related to data breaches, ransomware and other digital incidents.
- Commercial auto. Vehicles used for the business. A personal auto policy usually does not cover business use.
- Key person and buy-sell cover. Life or disability insurance on owners or key staff, often used to fund a business transfer.
Working from home
A home insurance policy usually excludes or limits business activity. If you run a business from home, ask what is and is not covered.
Questions to ask an advisor
- Which risks in my business are the most likely and the most costly?
- Are my clients, landlord or contracts requiring specific cover or limits?
- What does the policy exclude, and what are the deductibles?
- What happens if I cannot operate for several months?
Common mistakes
- Buying only what a contract requires and missing real risks.
- Not updating the policy as the business grows, adds staff or changes what it does.
- Assuming personal policies cover business activity.