What business insurance do you actually need?

General liability is the foundational policy and covers bodily injury and property damage to third parties, along with certain advertising injury claims. It is what a client means when a contract requires proof of insurance, and it is what responds if a visitor is hurt at your premises or you damage a client's property. Professional liability, also called errors and omissions, covers claims that your professional work was negligent or failed to deliver as promised, and it is the relevant policy for consultants, designers, accountants, and anyone whose deliverable is advice or expertise. General liability does not cover professional mistakes, which is the gap most commonly discovered at the worst possible time.

Beyond those, coverage follows your specific exposure. Workers' compensation is legally required in nearly every state once you have employees, with thresholds and rules varying. Commercial property covers your equipment and premises. Commercial auto is necessary if vehicles are used for business, because personal auto policies exclude business use, and that exclusion is enforced. Cyber liability matters for anyone holding customer data. Business interruption covers lost income when a covered event stops operations. An LLC does not substitute for any of this: the entity limits which assets a creditor can reach, while insurance pays the claim.

One frequently missed point for home-based businesses. Standard homeowners and renters policies contain business exclusions, typically capping business property coverage at a small amount and excluding business liability entirely, so a client injured in your home office or stolen business equipment may not be covered. The fix is usually an endorsement to the existing policy or a separate business owner's policy, both of which are inexpensive relative to the exposure. Read the exclusions rather than the summary page, and confirm whether your policy is claims-made, which covers claims filed during the policy period, or occurrence-based, which covers incidents that happened during it, since the difference determines what happens when you cancel.