General liability comes first
General liability covers bodily injury and property damage you cause to third parties, plus certain advertising and reputational claims. Nearly every lease, vendor agreement, and client contract requires it, typically at $1 million per occurrence and $2 million aggregate.
Workers compensation is usually mandatory
Most states require workers compensation as soon as you have one employee, and some include owners and contractors. It pays medical costs and lost wages for work injuries and, in exchange, shields you from most employee injury lawsuits.
Penalties for operating without it are steep, and general contractors will ask for your certificate before you set foot on site.
Property and the business owners policy
Commercial property covers your building, equipment, inventory, and tenant improvements. A business owners policy (BOP) bundles general liability, property, and business interruption into one package at a lower combined price for small, lower-risk businesses.
Business interruption, included in most BOPs, replaces lost income while you recover from a covered property loss. It is often the coverage that keeps a small business alive.
Professional liability and cyber
If you give advice, design something, or provide a service, professional liability (errors and omissions) covers claims that your work caused a financial loss. Consultants, agencies, and tech firms should treat it as essential.
Cyber liability covers breach response, notification, and third-party claims after a data incident. If you store customer data or take payments online, it has moved from optional to expected.
Key takeaways
- General liability at $1M/$2M is the contract standard.
- Workers compensation is required in most states from the first hire.
- A BOP is often the most efficient package for small businesses.
- Service businesses need professional liability; anyone holding data needs cyber.
This guide is general education, not advice for your situation. Coverage, availability, and requirements vary by state and carrier. A licensed agent can confirm what applies to you.