Business Insurance

What it is

Business (commercial) insurance protects companies from financial losses caused by unexpected events such as lawsuits, accidents, natural disasters, or business interruptions. Policies are tailored to the risks a company faces and can cover property damage, legal liability, employee-related claims, lost income, and more.

Why it matters

Having appropriate coverage helps businesses survive costly claims and continue operating after a loss. Some coverages are legally required in many places (for example, workers’ compensation and commercial auto insurance); others are optional but commonly recommended.

Common types of business insurance

• Commercial General Liability (CGL): Covers third‑party bodily injury, property damage, personal and advertising injury (e.g., libel or slander), defense costs, and settlements.
• Professional Liability (Errors & Omissions): For service providers; covers claims of negligence, malpractice, or errors in the services provided.
• Commercial Property: Protects buildings, equipment, inventory, and signs from perils like fire, storm damage, and theft. Note: standard property policies often exclude flood and earthquake—separate policies may be needed.
• Business Owner’s Policy (BOP): A bundled package that typically combines property and liability coverage, often cost‑effective for small businesses and some home‑based businesses.
• Product Liability: For manufacturers, distributors, and retailers; covers claims arising from defective or harmful products.
• Commercial Auto: Required for vehicles used in a business; covers vehicle damage, cargo, and third‑party injuries. State minimums vary and premiums depend on factors like driver records and vehicle condition.
• Business Interruption (Business Continuation): Reimburses lost income and ongoing expenses when operations are disrupted by a covered event; often added to property policies and can include civil authority coverage when a government order forces closure.
• Home‑Based Business Coverage: Standard homeowner policies usually don’t cover business equipment or inventory. A rider or a small commercial policy can address these gaps.

How much it costs

Premiums vary widely based on industry, location, number of employees, coverage limits, claims history, and specific risks. For context, reported median monthly BOP costs are in the range of about $55–$70, but many businesses will pay more or less depending on their situation.

What affects price

• Number of employees and payroll size
• Type of business and industry risk
• Location (crime, weather, regional exposure)
• Coverage limits, deductibles, and endorsements
• Claims history and safety practices
• Value of physical assets and inventory

How to obtain coverage

• Work with a licensed insurance agent or broker to evaluate risks and compare policies.
• Contact insurers directly—many offer online quotes or phone support.
• Check with your state department of insurance or the National Association of Insurance Commissioners (NAIC) to verify licensing and consumer resources.
• Review policy exclusions and consider endorsements for gaps (e.g., flood, cyber liability).

Bottom line

Business insurance is essential for protecting a company’s finances and continuity. Assess your specific risks, prioritize coverages required by law, and consider a BOP or a combination of targeted policies to address gaps. Consulting a licensed broker or agent will help you find appropriate, cost‑effective protection so your business can withstand unexpected setbacks.