Business insurance coverage types, explained

The foundation of business insurance. Pays for third-party bodily injury, property damage, and personal/advertising injury claims arising from your business operations.

Typical claims GL covers:

• Customer slips at your premises and is injured
• You accidentally damage a client's property while doing your work
• A claim that your advertising or business statements injured someone's reputation

Standard limits: $1M per occurrence / $2M aggregate. Most B2B contracts require this minimum.

GL does not cover: financial losses from your work (that's professional liability), your own employees' injuries (workers' comp), your own property (commercial property), data breaches (cyber).

Covers financial losses your clients claim came from your professional services or advice. Required if you do any kind of professional work — consulting, design, IT, accounting, legal, healthcare, real estate, financial advising.

Typical claims:

• A client claims your work caused them financial harm
• Allegations of negligence, errors, or omissions in your services
• Failure to deliver as promised

GL doesn't cover any of these — only PL does. Standard limits: $1M-$2M for most professional services.

A pre-bundled package combining general liability + commercial property + business interruption. Sold to qualifying small businesses at a meaningful discount vs. buying these separately.

BOP qualifying criteria typically include:

• Annual revenue under $1M-$5M (varies by carrier)
• Eligible business class (most service, retail, office, and light manufacturing qualify)
• Limited premises (typically under 25,000 sq ft)

If your business qualifies, a BOP is almost always cheaper than buying the components separately.

Covers your business's physical property — buildings, equipment, inventory, furniture, computers, signage. Pays for damage from covered perils (fire, theft, vandalism, certain weather events).

Important sub-choices:

• Replacement cost vs. actual cash value — always pick replacement cost
• Special form (open peril) vs. basic/broad form — special form is broader and worth the modest premium difference

If you don't own the building, you still need commercial property to cover your contents and equipment.

Pays for lost income and continuing expenses if a covered event forces you to suspend operations. Typically included in a BOP; available separately for businesses that don't qualify for a BOP.

Key sublimits to verify:

• Coverage period: 12 months is typical; some businesses need longer recovery windows
• Extended business income: covers the ramp-up period after you reopen, not just while you're closed
• Civil authority coverage: covers losses when authorities prevent access to your business (e.g., after a nearby fire)

Required by law in nearly every state if you have employees (Texas is the major exception, but most Texas employers still carry it).

Covers:

• Medical expenses for work-related injuries
• Lost wages while injured workers recover
• Disability benefits
• Death benefits

In exchange, employees generally cannot sue you for workplace injuries — this is the "grand bargain" of workers' comp.

Covers expenses from data breaches and cyber incidents. Increasingly essential — average small-business breach costs $120K-$1.2M.

Typical cyber coverage includes:

• First-party: your costs for forensic investigation, customer notification, credit monitoring, business interruption, ransomware payments
• Third-party: claims by customers, employees, or partners whose data was compromised, plus regulatory fines

If you handle any customer or employee data, accept payments, or use cloud services, you have cyber exposure. Don't skip this.

Covers vehicles your business owns and uses for business purposes. Personal auto policies typically exclude business use.

Sub-types:

• Owned auto: vehicles titled to the business
• Hired auto: rented or leased vehicles
• Non-owned auto (HNOA): employees using their personal vehicles for business — important even if your business doesn't own any vehicles

Excess liability coverage that sits on top of your underlying liability layers (GL, commercial auto, employer's liability). Kicks in when underlying limits are exhausted.

Affordable: a $1M commercial umbrella often costs $400-$1,200/year for a small business. The first million is the most expensive; each additional million adds less.

Worth carrying once your business has meaningful assets or your contracts require it.

Employment Practices Liability (EPLI): covers claims from employees for discrimination, harassment, wrongful termination. Essential once you have employees.

Directors & Officers (D&O): covers personal liability of executives. Common requirement for raising capital or sitting on boards.

Product liability: separate or as part of GL for businesses that manufacture or sell physical products.

Equipment breakdown: covers mechanical failures of business equipment. Often a BOP endorsement.

Crime / fidelity: covers employee theft, forgery, computer fraud.

Inland marine: covers business property in transit or at off-premises locations.