Small Business Insurance: 7 Common Policies and When You Need Each

The National Association of Insurance Commissioners (NAIC) says commercial general liability covers four categories of events: bodily injury, damage to others' property, personal injury including slander and libel, and false or misleading advertising (NAIC small business guide). The SBA lists it as suitable for "any business."

Before you buy, check what your client contracts and lease ask for. Read more on the general liability coverage page.

Commercial property insurance protects your company property against "fire, smoke, wind and hailstorms, civil disobedience and vandalism," among other events, according to the SBA. A business owners policy (BOP) packages property, business interruption and liability insurance, and the NAIC says it "can be a less costly option than buying individual policies" for many small businesses.

Not every business qualifies for a BOP. Our BOP proposal checklist shows the eligibility limits in ISO's standard program, and the BOP coverage page explains the package.

Workers' compensation pays an injured employee's medical expenses, rehabilitation costs and lost wages. In exchange for those benefits, employees "will not be allowed to sue their employers," the NAIC explains. It is mandatory for most employers in every state except Texas.

Texas is the exception: "private employers can choose to carry workers' compensation insurance coverage, but it is not required in most cases" (TDI). Rules vary by state, so check yours on the workers' compensation coverage page and with your state agency.

Most states set a minimum auto liability limit; check your state's motor vehicle agency for its rule. California's DMV, for example, lists $30,000 for injury or death to one person, $60,000 for more than one person and $15,000 for property damage on "Private Passenger, Commercial and Fleet Vehicles" (California DMV). Federal minimums apply to many for-hire trucking and passenger carriers (49 CFR 387.9).

The NAIC notes that a BOP "typically does not include commercial auto insurance" and that commercial auto policies typically have higher liability limits, "for example $1 million." Our commercial auto limits guide compares state, federal and contract minimums.

Professional liability "provides coverage for claims for damages arising from the performance of professional services," the Texas Department of Insurance explains. General liability and professional liability "cover different kinds of damage," so having one does not answer whether you need the other.

Some licenses require it. In Texas, "home day care centers, HVAC installers, plumbers, and real estate inspectors must have professional liability insurance to get a license" (TDI professional liability FAQ).

Clients can require it too. Asked whether a client can require professional liability insurance, the same TDI FAQ answers: "A person hiring you may require that you have insurance and provide proof of that insurance." Compare the two in our general liability vs. professional liability guide, or see the professional liability coverage page.

The Federal Trade Commission splits cyber insurance into first-party coverage, for your own costs such as forensic investigation, data recovery, customer notification and cyber extortion, and third-party coverage, for claims and regulatory inquiries brought against you (FTC).

Before you compare offers, list the data you hold, the systems you rely on and what your clients ask for. Our 2026 cyber insurance guide covers ransomware and the security questions insurers ask, and the cyber insurance coverage page explains the policy.

Umbrella liability insurance is "excess liability insurance coverage above the limits of automobile liability and CGL policies," and it can also cover some exposures the primary CGL policy does not, according to the Texas Department of Insurance. The NAIC describes umbrella limits typically ranging from $1 million to $5 million (NAIC).

If a contract asks for higher limits than your primary policies carry, ask whether umbrella limits count toward them. See the commercial umbrella coverage page.

Some businesses need coverage outside this list, such as directors and officers liability, or product liability for businesses that make or sell goods, which the SBA lists separately. Ask your agent which apply to your operations.

Write down your employees, vehicles, services, property, data and contract requirements, then take the list to an agent. If you want PolicyBenchmark to follow up, request coverage help.

Sources checked October 3, 2026. Texas and California are examples; requirements in your state may differ, so confirm them with your state's insurance department.