Frequently asked questions about business insurance

Business insurance, also called commercial insurance, provides crucial protection for any small business. If there’s an accident at your business, you could face a lawsuit. The high cost of litigation, medical bills, and property damage claims is the primary reason businesses need insurance.

The risks you face determine which policies you need. The policy most businesses purchase is general liability insurance, which protects against customer injuries and other common accidents. You may need additional policies if you have employees, own a building, own a business vehicle, or provide expert advice.

Learn more about why a business might need liability insurance.

Business insurance protects your company from costly risks that could otherwise threaten its survival. Key benefits include:

• Liability coverage for accidents, injuries, or lawsuits
• Property protection for your equipment, inventory, or buildings
• Business continuity through income replacement after a covered disruption
• Cybersecurity support for data breaches or cyberattacks
• Compliance and contracts by meeting legal, licensing, lease, or client requirements
• Tax advantages, since premiums are usually deductible

Insurance helps safeguard your finances, keeps operations running, and gives clients and partners confidence in your business. Learn more about the benefits of business insurance.

In certain cases, business insurance is required by law. Most states require businesses with employees to obtain workers’ compensation insurance. Business-owned vehicles must be insured with commercial auto insurance.

State laws may also require some businesses to obtain insurance as part of the licensing process. For example, bars typically need liquor liability insurance as a prerequisite for a liquor license.

The right amount depends on your industry, risks, contracts, and state requirements. Most small businesses buy $1 million per-occurrence / $2 million aggregate in general liability coverage, which is often enough to meet landlord or client requirements.

You may need higher limits if:

• You work in a high-risk field, like construction or healthcare
• You handle sensitive customer data and need more cyber liability coverage
• Contracts, landlords, or licensing boards require more coverage

When in doubt, consider your worst-case lawsuit or loss scenario and talk with an insurance agent to find limits that fully protect your business.

Tail coverage is an endorsement that extends protection on a claims-made policy (such as professional liability insurance, errors and omissions insurance, or directors and officers insurance) after the policy ends. It covers claims filed for incidents that happened while the policy was active but were reported later.

This type of coverage is especially important if you’re retiring, changing insurers, or closing your business, since claims can surface months or even years after the original incident.

There are several situations in which businesses are required to obtain commercial insurance. For example, most states require businesses with employees to purchase workers’ compensation insurance. Business-owned vehicles must be covered by commercial auto insurance.

While it’s generally not required by law, general liability insurance is often included in the terms of a commercial lease or client contract, and may be mandated for certain profession licensing, such as contractors. Learn more about the types of business insurance.

Business liability insurance is any commercial insurance that involves a business’s responsibility for losses, injuries, or damages. Types of liability insurance include:

• General liability insurance to cover customer injuries and property damage
• Professional liability insurance for work mistakes that negatively impact a client
• Commercial auto insurance for accidents involving business-owned vehicles
• Employer’s liability insurance to protect against employee injury lawsuits

Learn more about business liability insurance.

Business property insurance, also called commercial property insurance, protects your physical assets—like buildings, equipment, inventory, and furniture—if they’re damaged, destroyed, or stolen due to covered events such as fire, theft, or natural disasters.

It can also cover temporary relocation costs if your business can’t operate while repairs are made. This insurance helps keep your operations running and reduces financial loss from unexpected property damage.

Business interruption insurance helps cover lost income and operating expenses if your business can’t operate due to a covered event, such as a fire, storm, or other disaster.

It can pay for things like rent, payroll, and temporary relocation costs, helping your business stay afloat while recovering from an unexpected disruption.

A business owner’s policy bundles key coverage types—general liability insurance and commercial property insurance—in a single cost-saving package for small businesses.

It often includes options like business interruption, making it a convenient and affordable way to protect low-risk businesses against common liabilities.

Business auto insurance, also called commercial auto insurance, covers vehicles your business owns. Additionally, a hired and non-owned auto policy would offer protection for personal, leased, and rented vehicles used for work purposes.

These policies protect against liability for accidents, property damage, and injuries, and can also cover physical damage to your vehicles from collisions, theft, or other covered events.

The coverage you need depends on how many vehicles you have, how they’re used, and whether employees drive them for business purposes.

Liquor liability insurance protects businesses that sell, serve, or distribute alcohol from claims related to injuries or damages caused by intoxicated customers. Some states, especially those with dram shop laws, may require this coverage.

It can cover legal fees, settlements, or judgments if someone is harmed due to alcohol served at your establishment, such as a bar, restaurant, or liquor store.

Special event insurance protects against unexpected accidents, injuries, or property damage that occur during a one-time event, such as a wedding, festival, or corporate gathering.

It can cover legal costs, cancellation fees, and other expenses, helping event organizers avoid financial loss if something goes wrong.

Business insurance costs vary based on the policies you purchase and your coverage limits. Other factors include your industry, number of employees, revenue, and location. Small, low-risk businesses—especially those that qualify for a business owner’s policy (BOP)—pay less for insurance than larger companies.

Insureon can help you get cheap business insurance that meets the unique needs of your small business through our online application. You can compare quotes from top-rated insurance carriers, select policies, and begin coverage in less than 24 hours.

Getting insurance coverage through Insureon is one of the easiest ways to save money.

With Insureon, you can compare multiple quotes from top U.S. carriers with our online application and then select the policies that you need at the most affordable price. Insurance agents are available to help walk you through your different options and choose the right coverage for your small business. Once you select your policies, you can begin coverage that very same day.

You can also contact insurance companies directly and request rates, but you’ll have to provide your business details each time you apply.

Get a closer look at how to get cheap insurance for different types of coverage:

• Cyber insurance
• Commercial auto insurance
• Commercial property insurance
• General liability insurance
• Workers' compensation insurance
• Professional liability insurance
• Errors and omissions (E&O) insurance
• Contractor insurance

Business income for insurance is usually calculated based on your net profit and operating expenses before taxes. This includes revenue from sales, services, and other business activities, minus normal operating costs.

Your insurance company may ask to see your:

• Income tax returns
• Sales records and receipts
• Profit and loss statements
• Payroll records

Accurate calculation helps ensure your business income insurance provides enough coverage to replace lost income if your operations are disrupted.

The cost of a $2 million liability insurance policy depends on your industry, business size, location, and claims history. For many Insureon small business customers, a $1 million general liability insurance policy costs $42 per month, or about $500 annually.

Customers who need more coverage, like a $2 million general liability policy, will likely pay a higher premium.

Higher-risk industries or larger businesses may pay more, while low-risk businesses may pay less. Talking to an insurance agent can help you get an accurate quote for your specific situation.

Business insurance is considered one of the costs of doing business. That means you can deduct insurance premiums that serve a business purpose, such as your premium for general liability insurance or professional liability insurance.

Find out more about when business insurance is tax deductible.

You can purchase business insurance through licensed insurance agents, brokers, or online marketplaces that specialize in small business coverage.

With Insureon, we make it easy to get the best, most affordable coverage for your business. Start by filling out our free online application to compare quotes from top-rated insurance companies. Information you might need for the application includes:

• Location of your business
• Number of employees
• Business assets
• Estimated annual revenue

This information helps our insurance agents find the right coverage for your business. You can select which insurance products you're interested in or ask an agent for advice.

An ACORD Certificate of Insurance (COI) is a standardized document that shows proof of your business insurance coverage. COIs list the type of coverage, policy limits, effective dates, and your insurer’s information.

Certificates of liability insurance are often required by clients, landlords, or licensing agencies to verify that your business has the necessary insurance for a contract, commercial lease, or license.

For example, an ACORD 28 Evidence of Commercial Property Insurance is a document proving your business has commercial property insurance.

You can buy a policy online and get a certificate of liability insurance with Insureon in three easy steps:

1. Complete an online application

Complete Insureon’s free online application, which asks for details about your business. It takes only a few minutes to complete. You’ll receive quotes from top-rated U.S. carriers when you finish the application.

2. Compare quotes and choose a policy

Look over your quotes and choose a policy that provides your desired amount of protection and fulfills the requirements of your commercial lease or client contract. At this point, you can chat with a licensed Insureon agent to make sure the policy contains everything you need.

3. Pay for your policy and download a certificate

Pay for your policy or sign up for a payment plan. After the policy is issued, you can download a certificate of insurance. The certificate will include:

• Insurance provider
• Policy type
• Policy limits
• Any additional insureds (a client or partner may request this)

View a sample ACORD 25 form: certificate of liability insurance [PDF] or learn more about how to get business insurance.

A certificate of insurance is free. Much like a receipt, the document is proof that you’ve paid for a policy and you’re insured.

The cost of the policy depends on the type of insurance, your policy limits, and business factors, such as revenue and number of employees. See our small business insurance cost analysis for details about insurance costs.

General liability and workers’ compensation insurance can both cover medical costs when someone is injured at your business.

General liability covers non-employee injuries, such as a client tripping in your office. Workers' comp covers employee injuries, such as a lifting injury or an employee slip-and-fall accident. You may need to purchase workers' compensation to fulfill your state's requirements.

Professional liability and general liability insurance both offer financial protection against lawsuits.

Professional liability insurance covers the cost of a lawsuit if a client sues your business over the quality of your professional services. That includes lawsuits over missed deadlines, errors, and oversights. Consultants, professional service businesses, real estate professionals, and other experts likely need this coverage.

General liability insurance pays for lawsuits related to third-party bodily injuries, property damage, and advertising injuries (libel, slander, and copyright infringement). Most businesses should strongly consider general liability insurance, especially retailers and others who engage with the public.

Both general liability insurance and a business owner's policy provide basic protection for your business.

General liability insurance covers the cost of common third-party lawsuits, such as a client slip-and-fall injury in your office. A business owner's policy bundles general liability with commercial property insurance, which pays for repair or replacement of business property that is damaged, stolen, or destroyed.

A BOP costs less than purchasing each policy separately. However, only small, low-risk businesses are eligible.

Commercial auto insurance and hired and non-owned auto insurance (HNOA) both provide financial protection against lawsuits if you or an employee gets into a vehicle accident. Commercial auto insurance can cover vehicle damage and theft, as well.

Commercial auto insurance covers business-owned vehicles, while HNOA covers personal, leased, and rented vehicles driven for business purposes. Most states set minimum requirements for commercial auto insurance coverage. HNOA is recommended, but not required.

See more comparisons.

When comparing policies, it's also important to make sure that you have the right insurance partner to help you find the coverage you need.

Insurance agents and brokers are both licensed professionals who act as intermediaries between insurance buyers and the insurance market, and can offer coverage quotes for different policies.

However, there are two key differences between agents and brokers:

• Agents represent insurers, while brokers represent the client.
• Agents can complete insurance sales (bind coverage), while brokers cannot.

Brokers can search for policies from multiple different carriers, while an agent must sell policies from one or more of the insurance providers that they represent.

Do you have questions about a specific policy? You can find answers in our policy FAQs for: