4 Types of Insurance your Small Business Needs

Estimated reading time: 2 mins

Small businesses are the foundation of the economy, but a large portion of small businesses fail within several years. And a surprising number of these businesses fail because they didn’t have the right type of insurance to mitigate the risks they were facing. Insurance doesn’t prevent bad things from happening, but it can offset the negative consequences of these undesirable events. Here are the four types of insurance every business needs.

Property Insurance

One out of every four businesses that close their doors after a disaster will never reopen. This means you need property insurance to cover potential losses due to natural disasters. However, that isn’t the only reason to have property insurance. Property insurance covers everything from storms to fires to break-ins. Property insurance covers the building, furniture, inventory, and equipment. You may need to get insurance to cover a specific type of risk, such as flood insurance or earthquake insurance, to provide coverage that the main property insurance policy doesn’t cover.

Note that if you have a home-based business, your homeowner’s policy won’t cover your commercial property. In this case, you need home-based business insurance. If you’re renting a property for private or commercial use, then renter’s insurance may be appropriate.

Liability Insurance

Liability insurance can take several forms. Professional liability insurance, commonly known as errors and omissions insurance, provides coverage when someone says a business has caused damages from a failure to perform or made a mistake when delivering services.

Professional liability insurance is not a one size fits all product. Insurers provide insurance coverage based on the risks associated with each industry and create a custom policy for each client. Product liability insurance is appropriate for manufacturers. Even if your product is quite safe, you could be sued by someone who says it isn’t. Product liability insurance kicks in if the defective product caused damages, as well.

General liability insurance covers damages and pays for a legal defense when the business is sued or alleged to have caused harm or injury to some third party. This is the insurance that kicks in if someone slips on your premises and sues. General liability insurance covers damage employees may cause.

Directors and officers’ insurance pays for the defense and damages if company personnel are sued for actions that affected the company’s profitability.

General liability insurance should be the first thing you shop for since many industries require a minimum level of liability insurance even to be allowed to start a business. Other types of liability insurance may be required depending on the risks you want to cover and the particulars of the industry you work in. Consult with companies like Cornerstone Support to understand the types of insurance you need and how to stay compliant with local licensing regulations.

Worker’s Compensation Insurance

Worker’s compensation insurance covers the medical treatment, disability and death benefits when an employee is injured and/or killed on the job. The workers’ compensation insurance covers everything from falls to carpal tunnel syndrome.

Business Interruption Insurance

Business interruption insurance kicks in when the business is no longer able to engage in normal operations at their main location. Business interruption insurance makes up for the lost income in these cases. Business interruption insurance is particularly valuable for retail stores.


While no two businesses face the exact same risks, there are certain types of insurance every business should have. Consider insurance an investment, protecting your business in the worst-case scenario and ensuring your peace of mind.

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