Small Business Insurance Checklist: 10 Policies Every Owner Should Consider

What it covers: Third-party bodily injury, property damage, and advertising injury (libel, slander, copyright infringement in your advertising). If a customer slips and falls at your business, or if your operations damage a client's property, general liability responds.

Who needs it: Virtually every business. General liability is the foundation of any commercial insurance program. Most commercial leases, client contracts, and vendor agreements require it.

Typical cost: $400–$2,000 per year for small, low-risk businesses. Higher-risk industries such as construction, manufacturing, and food service pay more, often $2,000–$5,000+ per year.

Key consideration: General liability does not cover your own property, your employees' injuries, or claims arising from professional errors. Those require separate coverage.

What it covers: Workers' compensation covers medical expenses, lost wages, and rehabilitation costs for employees who are injured or become ill as a result of their job duties. It also provides death benefits to the families of workers killed on the job.

Who needs it: Any business with employees, in almost every state. Most states require workers' comp coverage as soon as you hire your first employee. Even in states that do not mandate coverage (Texas and South Dakota), carrying it provides important liability protections.

Typical cost: $500–$3,000+ per year for small businesses. Rates vary dramatically by industry — office-based businesses pay the least, while construction and manufacturing pay the most. Premiums are calculated as a rate per $100 of payroll, multiplied by your experience modification rate (EMR).

Key consideration: Independent contractors are generally not covered under your workers' comp policy, but misclassifying employees as contractors can result in significant penalties and back-premium charges.

What it covers: A BOP bundles general liability, commercial property insurance, and business interruption coverage into a single policy. It covers your building (if owned), business personal property, equipment, inventory, and loss of income if a covered event forces you to close temporarily.

Who needs it: Small to mid-sized businesses that operate from a physical location — offices, retail stores, restaurants, professional practices. A BOP is typically less expensive than purchasing general liability and commercial property separately.

Typical cost: $500–$2,500 per year, depending on the value of your property, your location, and your industry. BOPs generally offer 10–15% savings compared to buying each included coverage individually.

Key consideration: BOPs have eligibility requirements — typically, your business must fall below certain revenue and square footage thresholds. Larger businesses usually need standalone policies.

What it covers: Liability and physical damage coverage for vehicles owned, leased, or used by your business. This includes bodily injury and property damage liability, collision, comprehensive, medical payments, and uninsured/underinsured motorist coverage.

Who needs it: Any business that owns or leases vehicles for business use. Businesses that have employees driving their personal vehicles for work should also consider hired and non-owned auto coverage, which is typically added as an endorsement to a commercial auto or GL policy.

Typical cost: $1,200–$3,500 per year per vehicle. Premiums depend on vehicle type, use, driver records, coverage limits, and location. Heavy trucks and specialized vehicles cost more to insure.

Key consideration: Personal auto policies exclude business use. If an employee is in an accident while performing work duties in their personal vehicle, your personal auto policy may deny the claim.

What it covers: Claims arising from professional errors, omissions, negligence, or failure to deliver professional services as promised. This covers legal defense costs and settlements or judgments resulting from such claims.

Who needs it: Any business that provides professional advice, services, or designs. Common purchasers include consultants, accountants, architects, engineers, IT service providers, real estate agents, marketing agencies, and financial advisors.

Typical cost: $500–$2,500 per year for most small professional firms. Premiums depend on the nature of your services, your annual revenue, claims history, and policy limits.

Key consideration: General liability does not cover professional errors — it only covers bodily injury and property damage. If your business provides services or advice, you likely need both GL and professional liability.

What it covers: Cyber insurance covers costs associated with data breaches, ransomware attacks, network security failures, and privacy violations. Coverage typically includes notification costs, forensic investigation, credit monitoring for affected individuals, legal defense, regulatory fines, and business interruption losses resulting from a cyber event.

Who needs it: Any business that stores sensitive customer data, processes payments, or relies heavily on technology systems. In 2026, cyber threats affect businesses of all sizes — small businesses are increasingly targeted because they often have weaker security controls.

Typical cost: $500–$3,000 per year for small businesses. Premiums depend on the volume and type of data you handle, your cybersecurity practices, your industry, and your revenue. Businesses that handle healthcare, financial, or large volumes of personal data pay more.

Key consideration: Many general liability and BOP policies explicitly exclude cyber-related losses. A standalone cyber policy is the only way to ensure coverage for these increasingly common risks.

What it covers: Additional liability limits above your underlying general liability, commercial auto, and employer's liability policies. An umbrella policy activates when the limits of your underlying policies are exhausted.

Who needs it: Businesses that face significant liability exposure — those with high foot traffic, company vehicles, employees working at client sites, or operations that could result in catastrophic claims. It is also valuable for businesses with contractual requirements for higher liability limits.

Typical cost: $400–$1,500 per year for the first $1 million of umbrella coverage. Additional increments of $1 million cost progressively less. A $5 million umbrella might cost $1,500–$3,500 per year.

Key consideration: An umbrella policy is one of the most cost-effective ways to increase your liability protection. The per-million cost is significantly lower than increasing the limits on each underlying policy individually.

What it covers: Directors and officers (D&O) insurance covers the personal liability of directors and officers for decisions they make in their roles leading the company. D&O covers legal defense costs, settlements, and judgments arising from claims of mismanagement, breach of fiduciary duty, regulatory violations, and other allegations against company leadership.

Who needs it: Corporations with a board of directors, VC-backed startups (investors typically require it), nonprofits (board members face personal liability), and any business where individuals serve in leadership or advisory roles.

Typical cost: $1,000–$5,000+ per year, depending on the size of the organization, its industry, revenue, and the coverage limits selected. Publicly traded companies pay significantly more.

Key consideration: Without D&O coverage, directors and officers may be personally liable for claims. This can make it difficult to recruit qualified board members and attract investment.

What it covers: Claims from employees alleging wrongful termination, discrimination, sexual harassment, retaliation, failure to promote, wage and hour violations, and other employment-related issues.

Who needs it: Any business with employees, but especially those with 10 or more employees. EPLI claims are among the most common and most expensive claims facing small businesses. Even businesses with strong HR practices are not immune — defense costs alone can exceed $75,000 regardless of the outcome.

Typical cost: $500–$3,000 per year for small businesses. Premiums depend on employee count, industry, location, claims history, and whether the business has formal HR policies, an employee handbook, and regular training.

Key consideration: Many small business owners believe they will never face an employment claim, but EEOC data shows that small employers are disproportionately targeted. EPLI provides critical protection against a risk that is difficult to avoid entirely.

What it covers: A life insurance policy purchased by the business on the life of a key employee, founder, or executive. The business is the beneficiary and receives the death benefit if the insured person dies. The proceeds help the business cover lost revenue, hire a replacement, or manage the transition.

Who needs it: Any business that depends heavily on one or a few individuals for its revenue, client relationships, specialized knowledge, or leadership. This includes founders, top salespeople, and executives with unique industry expertise.

Typical cost: $200–$2,000+ per year per insured person, depending on the coverage amount, the insured person's age and health, and the policy term. A 10-year, $500,000 term policy on a healthy 40-year-old typically costs $300–$600 per year.

Key consideration: Key person insurance is a business-owned asset. The premiums are not tax-deductible, but the death benefit is generally received tax-free by the business.

Not every business needs all 10 policies from day one. Here is a general framework for prioritizing:

Start with the essentials:

• General liability — needed by virtually every business
• Workers' compensation — required by law in most states once you have employees
• Commercial property or BOP — if you have a physical location, equipment, or inventory

Add based on your operations:

• Commercial auto — if you own business vehicles or have employees driving for work
• Professional liability — if you provide professional advice or services
• Cyber liability — if you store customer data or rely on technology systems

Layer in additional protection as you grow:

• Umbrella insurance — when your liability exposure exceeds your base policy limits
• EPLI — when you have a growing team
• D&O — when you have a board, investors, or advisory committee
• Key person insurance — when the business depends on specific individuals

Take our business insurance quiz to get personalized guidance on which policies may be most important for your specific business type, industry, and stage of growth.

Your insurance needs change as your business evolves. New employees, new locations, new services, and changes in revenue all affect your risk profile. Review your coverage at each renewal to ensure your policies still match your current operations and exposure.

Key triggers for a coverage review include:

• Hiring your first employees (or adding significantly to your headcount)
• Signing a lease or purchasing a commercial property
• Launching new products or services
• Taking on larger contracts with higher liability requirements
• Receiving outside investment
• Expanding into new states or regions
• Experiencing a claim or near-miss incident

An independent insurance agent or broker can help you evaluate your current coverage and identify gaps. Because they represent multiple carriers, they can also ensure you are getting competitive pricing across your entire insurance program.