With business insurance, you can protect the investment that you, your co-owners, and investors made. Although some commercial insurance policies are optional, most states mandate certain ones, such as workers' compensation. This article outlines six basic types you will likely need to consider, if not purchase. Besides state-required policies, whether you need certain coverage depends on the nature of your business as well.

Business Owners Policy

Insurers often combine more than one type of insurance coverage in a package, which is then sold as one contract. This is the case in a business owners policy (BOP), which often includes property, liability, crime, and other types of coverage in one policy. However, they do not include workers' compensation, health or disability insurance, or auto insurance. Because of the bundling, a BOP often sells at a reduced premium. Geared toward small and mid-sized businesses, BOPs can be more cost-effective than purchasing separate specialized policies. Eligibility requirements vary with the insurer, but they generally have limitations based on the class of business, location, size, and revenue.

Workers' Compensation Insurance

Depending on the state and how many employees you have working for you, you may be required to purchase workers' compensation insurance. It pays for medical care and replaces a portion of lost wages for the employee who is injured or becomes sick due to their job. These claims do not take into account who is at fault; thus, it has no effect the benefit amount. In case an employee should away due to work injuries, their family or estate will receive the benefits as stipulated in the contract.

Liability Insurance

Any business faces the risk of being sued due to human error, product issues, customer discontent, or other factors. For example, a defective product may have cause an injury to a customer. In this case, liability insurance helps pay for damages awarded to a claimant whenever a business is found to be liable. It typically covers damages, legal fees, and medical bills up to a certain limit.

Business Auto Insurance

If you have company vehicles, then you should consider business auto insurance. This type of policy provides three main types of coverage for vehicles owned by a business: physical damage, liability, and miscellaneous. The first pays for damage to the vehicles due to a car accident or other types of perils, such as fire, theft, and weather. The second covers injury to another or damage to another's property. It may also include underinsured and uninsured motorist coverage as well to protect you financially in case the other driver does not have sufficient coverage. Lastly, the third type of coverage may include a variety of options, such as roadside assistance, vehicle replacement cost, rental reimbursement and more.

Commercial Property Insurance

When it comes to business insurance, property insurance is the one of most important policies. Even if your business is small, property damage can significantly set you back, not only due to damage to the building but also the loss of the contents. This type of policy can cover the building, outdoor signs, and property inside the structure as well, which includes inventory, office furnishings, raw materials, computers, machinery, and any other equipment or items vital to business operations.

Depending on the amount of coverage you take out, you may be covered when a piece of equipment breaks down, or if you need debris removal should a fire or a destructive event occur. This is also the same for water damage and any other loss in the workplace.

Key Person Insurance

Usually, large corporations or larger businesses purchase this type of policy. Key person insurance is basically a disability or life insurance product that compensates a business, should they lose an important employee due to death or disability. This coverage helps soften the financial blow that would result from the loss of a crucial employee.


Having the right insurance policies could literally save your business in various cases, such as an accident in the workplace, a business vehicle collision, fire, flood, theft, or lawsuits. Knowing about the basic types available is half the battle. Purchasing the necessary coverage is the other. Business insurance helps ensure that what is yours, stays yours and that your business remains solvent.