The Types of Insurance a Business Needs

May 10, 2022

If you are just getting your business off the ground, have bought equipment and started hiring employees, insurance should be top of mind.

There are four types of insurance that most businesses purchase to protect themselves, and without them, one accident or oversight could leave you with liabilities you may not be able to cover. When a company is growing from a sole proprietorship to one with employees, the insurance needs grow quickly.

Here's a look at the types of insurance most small businesses carry as they start growing.

Property Insurance

This type of coverage provides compensation if business property is damaged, stolen or lost.

In addition to covering the physical business structure, property insurance covers personal property including:

Office furnishings
Raw materials
Other items that are part of business operations.

Property insurance coverage doesn't end with protecting physical assets. It also provides business interruption funds when owners must take steps to get their business back on track following a major loss and if their operations have been halted or impaired.

Property insurance may provide coverage for broken equipment in some cases if caused by a covered peril.  It may also provide coverage for water damage, debris removal following a fire, and several other specific items.

Workers' Compensation

Any company with employees is required to purchase workers' compensation insurance in most states.

Workers' compensation pays for a portion of lost wages for workers who are injured on the job. In addition, it covers the medical care they require. Coverage is provided to employees who are injured at work regardless of who is at fault.

If a worker dies as a result of the injuries they sustain, the insurance company compensates the surviving family members of the deceased.

Commercial Auto Insurance

This is only necessary if you have vehicles that you use in the course of business, or if you and/or your staff drive their own cars on company business.

Most personal vehicle insurance policies don't provide coverage if the automobile that is involved in an accident is used mostly for business purposes.

Business auto insurance policies cover vehicles that are owned and used by a business. Third parties injured by the policyholder's vehicle receive compensation for damages up to the policy limit amount.

Policies may provide compensation for repair or replacement of vehicles that are damaged from flooding, theft, accidents, and similar events.

Liability Insurance

Any business may face a lawsuit at some point during its existence. Liability insurance can cushion the blow by covering legal costs, settlements. or judgments.

For example, a person may claim that a contractor caused them harm from a negligent act that causes physical harm to them or their property; maybe they used a defective product that causes injury or damage, or what about a decision or act made by business or board of directors that negatively impacts a third party?  Think Medical Malpractice Insurance, Lawyer's (and yes, Insurance Agents!) Errors and Omissions insurance, or Director's & Officers coverage.  Liability coverage provides compensation for damages a company is deemed liable for.

However, the coverage is only provided up to the policy limit amounts. These policies usually provide funds for legal defense, medical bills, and several other related expenses.

The Takeaway

In addition to the four major types of coverage mentioned, there are several other valuable policies some companies may want to consider depending on their business. Umbrella policies and specialized liability policies are among the more common types.

Umbrella policies are often used as a second layer of insurance should you exhaust the limits of an underlying liability policy. These are usually obtained to prevent high unforeseen losses that may also have significant high risk exposures.

Specialized liability policies are available to businesses with unique needs, or organizations that run special events such as golf tournaments, trade fairs, and like right here in Revere, the annual sand sculpting festival.  

If you would like more information on coverage for your business, or if you would like us to offer a second opinion on what you currently have, contact me at or call us at 781-289-7445.  You may also feel free to take a picture of your current policy and text it to us at 781-289-7445.