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Types of business insurance

What type of business insurance do I need?

You know you need insurance to protect your business, but getting the right coverage can be tricky.

Buy too much coverage and you’re paying for things you’ll never need. If you buy too little, you can expose yourself and your business to costly lawsuits and payouts.

There are many different types of business insurance. Understanding them is the first step to putting together a package that will keep you covered.

One way to approach it is to consider two types of business insurance plans when shopping for insurance: core coverage and additional coverage.

Core coverage plans can protect you from some of the most common risks small businesses face and are sometimes required by law.

Additional Coverage plans can support the core types of business insurance. Oftentimes they are more relevant for specific types of businesses, such as restaurants, retail or construction.

Core coverage:

Additional coverage:

Core coverage

General liability

General liability insurance is often the first coverage business owners purchase because it can cover many of the most common accidents businesses face, including:

  • Slip and fall injuries (non-employees)
  • Property damage for property that doesn’t belong to you
  • Legal fees
  • Medical payments (non-employees)

You might need general liability insurance to get a professional license or secure a lease.

Workers’ compensation

Workers’ compensation can protect your business from lawsuits and other financial losses when an employee is injured or gets sick at work.

Most states require it by law when you have employees, but rules are different depending on where you do business.

Professional liability

If you make an error while doing your job that costs someone money, professional liability (sometimes referred to as errors & omissions insurance) can help cover the cost of those mistakes.

Accountants, consultants and real estate professionals commonly carry professional liability insurance, but it can also benefit construction professionals. Mistakes happen, but these policies can make them less costly.

Commercial property insurance

People often mistakenly think commercial property insurance only covers the building where they do business — “property” as in real estate.

Commercial property can also cover the gear and goods, inventory and equipment you need to run your business.

Commercial property can cover losses in income if you have to close due to damage for a covered event, such as a fire or water damage.

Commercial auto

Almost every state requires commercial auto insurance if you drive for business purposes. It can help pay for injuries and property damage after an accident.

Additional coverage

Tools and equipment

Tools get damaged. Sometimes they get stolen. And on rare occasions, they’re just lost.

With tools and equipment coverage added to your general liability insurance, construction and cleaning professionals can get financial help without having to pay for everything out-of-pocket.

Liquor liability

General liability insurance alone usually won’t cover alcohol-related incidents. If you run a business that sells alcohol, you’ll need to add liquor liability to your general liability policy if you want added protection.

Product liability

If something you sell causes someone to get injured or become ill, you can be held responsible, whether you made the product or not.

Product liability insurance can protect your business from claims that a product you sold caused an injury or property damage.

Employment practices liability

Employment practices liability insurance (EPLI) can protect small businesses from financial losses if an employee sues for harassment, wrongful termination or discrimination. It can also help cover expenses related to Americans with Disabilities Act (ADA) compliance complaints.

Cyber liability

Cyber liability can help protect your business for expenses related to data breaches, theft, hacking, ransomware extortion, denial of service and more.

Due to the specific nature of the coverage, cyber liability is usually purchased as a stand-alone policy, although some companies offer it as an add-on to their general liability coverage.

Note: NEXT does not currently offer this coverage.

How to choose a business insurance package that’s right for you

Now that you know the different types of business insurance, it’s time to put together a package that matches the needs of your business.

What insurance are you required to carry?

Your state might require certain types of insurance (workers’ comp, for example), but that’s not where the requirements end.

Your local government may have business insurance requirements.You might be asked to provide proof of insurance for your landlord, lenders or clients you hope to work with.

Be sure you have the coverage your business needs both legally and professionally — and make sure you have easy access to your certificates of insurance once you buy coverage.

Know your business risks

A construction company with a large crew is probably going to need to make sure that everyone is covered if an accident happens on the job. This isn’t a concern for an accountant, but they’ll have to be sure they’re protected from professional mistakes.

Understand the specific risks your industry faces and get the insurance you need to protect against them.

Understand the costs

You may find what seems like a great deal on your insurance, with low premiums every month, but if that plan comes with a sky-high deductible, it might not be worth it in practice.

Additionally, if your per claim or aggregate limit is too low, you could find yourself paying out-of-pocket sooner than you think.

Make sure you understand the true cost and limits of your policy before making a purchase.

Special offers for bundling

One type of business insurance that you may have heard of that we haven’t mentioned yet is a Business Owners Policy (BOP). This is because a BOP isn’t a single policy, it’s actually a general liability policy combined with a commercial property policy.

This bundle is so common that it got a name of its own, but bundling policies is exactly how you can get the coverage for all of your business risks.

With NEXT, anytime you bundle, you can save up to 10% off the price, including BOPs.

Get the coverage you need with NEXT

At NEXT, we know every business has unique needs. That’s why we make bundling coverage options online tailored, fast and affordable for your business.

You can complete our online application, see policy options, buy coverage and get your certificate of insurance in less than 10 minutes.

Get your free instant quote today.

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Let’s find the coverage you need for your business

Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your small business.

General Liability insurance
General Liability

Protect yourself from accidents that cause physical injury or damaged property.

Professional Liability or Error and Omissions Insurance
Professional Liability/E&O

Shield yourself from lawsuits that claim your work errors caused financial losses.

Workers' Compensation Insurance
Workers’ Compensation

Cover medical bills and lost wages if your employees have an accident at work.

Commercial Auto Insurance
Commercial Auto

Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.

Tools & Equipment Insurance
Tools & Equipment

Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.

Commercial Property Insurance
Commercial Property

Keep your building, inventory and equipment protected from fire or water damage.

Business Owner’s Policy Insurance
Business Owner’s Policy

Combine general liability and commercial property into one policy to protect your business.

Take a look at some helpful blog posts
5 ways to save time with NEXT and get back to business

5 ways to save time with NEXT and get back to business

Why businesses need more than one business insurance policy

Why businesses need more than one business insurance policy

4 real-life examples when liability insurance can save your business

4 real-life examples when liability insurance can save your business

* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.