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Small Business Insurance

How Does Small Business Insurance Work?

Small business insurance is pretty simple. You make a payment (called a premium) in exchange for the insurance company’s promise to pick up the potentially enormous bill if something goes wrong in the future.

But there's no single "small business insurance policy," and that's a good thing. If one policy covered all the accidents, lawsuits, and damages a business might face, the premium would be crazy expensive! To help business owners save money, insurance companies offer different policies for different risks.

When we talk about small business insurance (also called commercial insurance or company insurance), we're referring to all the types of policies that can help protect your business.

Your company may not need every type of insurance. But considering 43 percent of small businesses have been threatened with or involved in a civil lawsuit (according to a survey by Penn Schoen Berland and Public Opinion Strategies), you most likely need some coverage.

That's where we can help. We work with several top carriers to offer you business insurance quotes for multiple policies. You compare them, choose the one you like, and secure the protection you need.

Let's take a look at the policies small-business owners may need.

4 Risks Small Business Insurance Policies Can Cover


You can't please everyone all the time. Luckily, there's a commercial insurance policy that helps protect your business if a disgruntled customer sues.



An employee's on-the-job accident can be your responsibility. Your company insurance can help cover the costs.



It only takes one severe storm to destroy your office space and all the stuff in it.



Accidents can be expensive, especially when they happen in business-owned vehicles.

Which Insurance Policies Does My Small Business Need?

You can't look in a crystal ball and predict the problems your business will encounter. But you can think about the complications that might arise when you work with customers, have employees, own commercial property, or drive vehicles.

Let's take a look at each risk category for more details.

(Want to know right now which insurance policies will benefit your business? Our Policy Buddy can show you in two minutes.)

Insurance Policies that Cover Client & Customer Risk

Your business wouldn’t be much without customers coming through the door. Unfortunately, interacting with clients brings the risk of lawsuits, which are not cheap. The Court Statistics Project reports that the median cost of a business liability lawsuit is about $54,000. (For context, our business liability insurance quotes typically range from $425 - $1,200.)

The good news is that there are several company insurance policies to help manage the risks presented by clients and members of the public. Consider these scenarios:

  • A customer has a slip-and-fall accident on your property: Commercial General Liability Insurance can help pay for immediate medical expenses and lawsuit costs if you're sued over a non-employee's bodily injury or property damage.
  • Your client loses money after taking your professional advice: Professional Liability Insurance (aka Errors & Omissions Insurance) generally pays for your defense if a client alleges you made mistakes in your work.
  • An employee loses their laptop, exposing your clients' financial information: Cyber Liability Insurance helps cover the cost of notification, credit monitoring, and other post-breach expenses.
  • An overserved patron hurts someone at your bar: In all 50 states, a business can be held liable for alcohol-related damage that happens on its premises, including fighting injuries and damage to patrons' property. In 42 states, a business can be liable for damage caused by drunk patrons after they leave. Liquor Liability Insurance can help manage those risks.

Sometimes it can be tricky to tell where one policy's coverage ends and another's begins. Take a look at our article "General Liability Insurance vs. Professional Liability Insurance" for more clarification.

Bonus tip: If you have a lot of cash in the bank, your business may have a better chance of surviving lawsuits. If not, you might want to supplement your protection with Umbrella Insurance. Getting Umbrella quotes is as easy as checking the Umbrella box when you apply.

Insurance Policies that Cover Employee Risks

Employees help your business run, but more people almost always means more risk. For example, when you have employees, you can be liable for their workplace injuries and violating their work rights. And that's not cheap. estimates that a workplace rights case costs $8,000 to $30,000 in legal fees.

Let's look at some situations where business insurance can help:

  • Your employee is hurt on the job. Some industries are inherently "safer" than others, but even office workers can get carpal tunnel syndrome. Most states require employers to carry Workers’ Compensation Insurance, which covers employees' occupational injury expenses.
  • An employee sues your business over workplace discrimination. Employment Practices Liability Insurance can cover disputes stemming from the employer-employee relationship.

Bonus tip: Nonprofit organizations and others with a board of directors may want Directors and Officers Insurance. D&O Insurance addresses disputes over decisions the board makes on behalf of the organization. Board members are not technically employees, but this policy may help attract quality talent to board positions.

Workplace rights cases can cost $8,000 - $30,000.

Insurance Policies that Cover Property Risks

According to a study by The Hartford, the average cost of a fire is $35,000 for small businesses. If you don't have that kind of money lying around, Commercial Property Insurance is probably a no-brainer. When certain weather events and disasters strike, it can help cover the cost of repairing and replacing your property.

The same study found burglary and theft are the most common small business claims, so whether you rent or own, chances are you could use the protection Property Insurance offers.

Bonus tip: Lots of Insureon customers are eligible for a Business Owner’s Policy, a policy that bundles Property Insurance and General Liability. It’s usually less expensive than buying the policies separately. (To receive Business Insurance Policy quotes, check the "General Liability and Business Property" box when you apply.)

Insurance Policies that Cover Vehicle Risks

Small-business owners are often unclear about the coverage they need for their vehicles. Many think they can drive their personal auto for business because it’s insured, but that can be a costly mistake if you or your employee gets in an accident. Vehicle claims average $45,000 for small-business owners, according to that same study by The Hartford.

That's why it's smart to carry coverage if you drive for work, especially if…

  • You have a business-owned vehicle. Whether you have a fleet of delivery vans or a single automobile, a vehicle registered in your business's name requires Commercial Auto Insurance.
  • You ask employees to drive their personal vehicles for work errands. Your business can be liable for their en-route accidents, and when that happens, Hired / Non-Owned Auto Insurance can help cover lawsuit expenses.

For more information on these two policies, check out “Commercial Auto Insurance vs. Hired and Non-Owned Auto Insurance.”

What Small Business Insurance Policies Do You Need?

If you have... Request quotes for...

General Liability Insurance

Professional Liability Insurance (Errors & Omissions)

Cyber Liability Insurance

Liquor Liability Insurance


Workers’ Compensation Insurance

Employment Practices Liability Insurance


Commercial Property Insurance

Business Owner’s Policy

Business Interruption Insurance


Commercial Auto Insurance

Hired / Non-Owned Auto Insurance

How Much Does Small Business Insurance Cost?

It depends on the type of policy and your business's characteristics. We realize that can be an unsatisfying answer, so let's take a look at what Insureon customers pay for their commercial insurance.

On average, our customers spend…

  • $48.75 per month for $1 million in General Liability coverage.
  • $86 per month for $1 million in Professional Liability coverage.

If those prices sound low to you, you're not alone. Before seeing actual quotes, a lot of small-business owners mistakenly think business insurance is too expensive for them. For a more detailed cost breakdown, check out our Business Insurance Cost Analysis page.

And even if you’re counting every penny, coverage is usually a better deal than paying for lawsuits on your own. According to Tort Liability Costs for Small Business [PDF], small business paid $35.6 billion in lawsuit costs out of pocket in 2008.

Don't get stuck with a legal bill that runs your bank account dry. Learn how to find company insurance you can afford.

Common Small Business Insurance Policies