Why businesses need more than one business insurance policy

Why businesses need more than one business insurance policy

Matt Crawford
By Matt Crawford
Jul 26, 2024
7 min read
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Understanding your small business insurance coverage options is essential to ensure you’re protected from the daily risks that you, your business, your property and your workers face. But your business may be vulnerable if you only have one type of policy in your business insurance package.

Business insurance can help provide financial support after an unexpected event that causes damage, harm or loss — but not if you don’t have the right coverage that’s tailored for you.

Jump ahead to learn more about:

Do small businesses need more than one type of insurance?

“Business insurance refers to different coverages that protect businesses against a variety of risks such as loss of inventory, property damage or potential lawsuits,” says Chris Rhodes, Chief Insurance Officer at NEXT. “Coverage should be tailored to each specific business’s needs. Depending on your business operations, a policy package might include a few different insurance coverages.”

Small business insurance can protect business owners and their employees from job-related risks. Depending on the type of work you do, your insurance may provide financial help if someone gets hurt, causes property damage or if your business is accused of a professional mistake.

Bundling two or more small business insurance policies together can help your business save money and provide coverage for numerous covered and unfortunate events.

Usually, a small business insurance package is composed of different policies, such as general liability insurance, professional liability insurance (in some professions called errors and omissions insurance, or E&O) and workers’ compensation insurance. Each small business insurance policy can help cover losses related to different risks.

What type of insurance do you need for a small business?

Finding the right small business insurance coverage isn’t one-size-fits-all.

For example, a real estate agent may need general liability coverage in case of accidental damage to someone’s property while hosting an open house.

The same agent might also need errors and omissions insurance if disagreements about a deal lead to legal action. Or they might need commercial auto insurance if an accident occurs while driving from one showing to the next.

If the agent has employees — such as an assistant for client management and marketing — they might need workers’ compensation insurance. Workers’ comp coverage could be required depending on which state the agent operates in.

When looking for small business insurance, look for an insurer who will allow you to bundle all the policies you need without paying for coverage that doesn’t apply to you.

How much insurance does a small business need? 

The amount of coverage your business needs is influenced by several factors, including:

  • Operations
  • Revenue
  • Payroll
  • Location

Start an instant quote with NEXT to see how much business insurance you’ll need, and what it will cost.

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5 essential small business insurance types

These common types of coverage can help cover losses related to your business’ risks:

1. General liability insurance

Many small business owners opt for general liability insurance since it can cover some of the most common risks, such as slip-and-fall injuries and damage to property that belongs to someone else. General liability coverage can also cover:

  1. Accidental injuries that involve your business and anyone who is not an employee. For example, a customer breaks their arm after slipping on a wet floor at your shop and wants you to cover medical expenses. Your business insurance could help pay those bills.
  2. Damage to other people’s property. If you accidentally break a customer’s window while making a repair, your coverage could help pay for its replacement.
  3. Personal and advertising injury claims, such as copyright infringement or slander, made against your company’s advertising. If a competitor claims you damaged their reputation with your advertising, your general liability insurance could help pay for a legal defense.

General liability can also be a requirement for commercial lease agreements, licensing agencies and client contracts.

2. Commercial property insurance

Commercial property insurance can cover damage or vandalism to business property that you own, including your equipment, inventory and business structure.

If you need to temporarily shut down due to a covered business interruption, commercial property can protect business owners from a loss of business income.

For example, let’s say you have a coffee shop and you own its commercial location. If a tree falls and crashes through the building’s roof, a commercial property policy could offer help to pay for the repair.

3. Business owner’s policy (BOP) insurance

A business owner’s policy, also called a BOP insurance policy, combines all the coverage of both general liability insurance and commercial property insurance in a single, more efficient and comprehensive package.

The beauty of a BOP is that it can carry more protection than just a single policy. It can help cover damage that you or your employees may inadvertently cause to another person’s property, as well as bodily injury accidents that injure patrons or passersby to your business.

BOP keeps going to help protect your business inventory in the event of a fire, water damage or other covered event.

It also covers business income interruptions, advertising injury if you’re accused of copyright infringement, libel or slander, and some court and legal fees if you need an attorney for a lawsuit. In short, a BOP can do a lot.

4. Professional liability insurance

Professional liability insurance, sometimes known as errors and omissions (E&O) insurance, can protect you against damages that may occur when providing a service or advice to clients. 

If you’re accused of causing a financial loss due to professional negligence or a mistake related to your business services, your professional liability policy could help cover related costs.

Professionals like insurance agents, real estate agents, legal services and financial advisors tend to carry professional liability insurance.

5. Workers’ compensation insurance

Workers’ compensation insurance can help pay for medical and rehabilitation costs and lost wages if an employee experiences a work-related injury or illness.

For example, say a restaurant employee pulls a muscle lifting a heavy box. Workers’ comp insurance could pay for the employee’s medical care and rehabilitation costs related to the injury.

Many states require employers to have workers’ comp to protect the health and well-being of employees. In some states, optional workers’ comp may also cover business owners and self-employed workers.

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How NEXT helps protect small business owners

Most small businesses are vulnerable to multiple risks; protection from multiple business insurance policies in their coverage package can help keep financial risk at bay.

Start a free instant quote online, answer a few questions about your business and choose a package that’s tailored just for you — all in about 10 minutes. We make sure you know what you’re paying for, and we won’t charge for coverage you don’t need.

Your certificate of insurance will be available immediately, and you can access your policy 24/7 via web or mobile app.

If you have questions, our licensed, U.S.-based insurance professionals are available to help.

Start a free quote with NEXT.

Matt Crawford
About the author

Matt Crawford leads NEXT's content team. He's a small business insurance specialist and has worked with business owners throughout his career as a community journalist and content marketer.


You can find him at one of his many favorite local restaurants in the San Francisco Bay Area when he's not at work.

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