🎯 In 30 seconds: Most small businesses need general liability, many can bundle it with property cover in a business owner’s policy (BOP), and anyone with employees needs workers’ comp under state law. Add professional, auto and cyber cover to fit what you actually do. Buy through an independent agent who can quote several insurers, and read what your lease and contracts require before you buy.
The main policies
| Policy | What it pays for | Who usually needs it |
|---|---|---|
| General liability (GL) | Injuries to other people and damage to their property caused by your business, plus legal defense | Nearly every business |
| Business owner’s policy (BOP) | A bundle: GL plus commercial property, often with business-interruption cover | Small shops, offices, many home-based businesses |
| Commercial property | Your building (if owned), equipment, inventory and fixtures after fire, storm, theft or vandalism | Anyone with real physical assets |
| Professional liability (E and O) | Claims that your advice or service was wrong or negligent and cost the client money | Bookkeepers, consultants, designers, tutors, inspectors |
| Product liability | Injury or damage caused by a product you make or sell | Makers, food sellers, retailers of their own goods |
| Workers’ compensation | Medical bills and lost wages for employees hurt on the job | Employers, as their state requires |
| Commercial auto | Vehicles used for business | Anyone driving to jobs or hauling tools |
| Cyber | Costs after a data breach or ransomware: notification, recovery, some liability | Anyone storing customer data or taking online payments |
| Key person life or disability | Pays the business if an essential owner dies or can’t work | Businesses with a loan, partners, or one indispensable person |
Workers’ comp is a state rule
For private employers, workers’ compensation is run by each state, not Washington (the Labor Department’s own programs cover federal workers and a few special groups). States set who must carry it, which workers count, and whether owners are included. Texas is the one state that lets private employers opt out; those “non-subscribers” must still post notices and file with the state, and they lose some legal defenses if an employee sues. Check your state’s workers’ comp board before your first hire.
What landlords and big customers will require
Expect requests in writing, usually in the lease or contract’s insurance section:
- A certificate of insurance (COI) showing your policies and limits. Your agent issues these, usually free.
- Additional insured status naming the landlord or customer on your GL policy, so it also protects them for claims arising from your work.
- Specific limits, often written as per-occurrence and aggregate amounts (for example $1 million / $2 million).
- Waiver of subrogation, which stops your insurer from suing them after paying your claim.
- Workers’ comp proof before a general contractor or property manager lets your crew on site.
Send the insurance section to your agent before you sign. Some requirements cost extra, and a few can’t be bought at all.
A worked example
A two-person handyman business with a van. A sensible stack: a BOP (GL plus tools and equipment), commercial auto for the van, workers’ comp for the employee, and, because customers ask for it, a license bond if the state or city requires one. Say a ladder falls and damages a client’s $4,000 window. GL handles the claim. Say the van is broken into and $6,000 of tools are taken: with a $1,000 deductible on equipment cover, the business pays $1,000 and the policy pays the rest, up to the limits. Without the equipment cover, the full $6,000 comes out of the business account the week the work stops.
How to buy it
- List your real risks: people on your premises, work in clients’ homes, advice that could go wrong, vehicles, data, employees.
- Use an independent agent or broker, who can quote several insurers. A captive agent sells one company’s policies. Either earns a commission, so ask how they’re paid.
- Get two or three quotes on the same limits and deductibles, then compare exclusions, not just price.
- Ask what is excluded for your trade. Roofing, tree work and food often carry special exclusions.
- Review every renewal. A new van, new employee or new service line can leave a gap.
For the cyber side, the FTC’s free small-business guide covers both prevention and what to look for in a cyber policy.