Launching your small business is exciting, but one overlooked aspect could leave you vulnerable—insurance. Whether you’re running a retail shop, offering consulting services, or managing a restaurant, getting the right insurance can safeguard your hard work from costly risks. So in this article, I’ll cover 6 essential policies any small business would need and how to get your business protected.

General Liability Insurance (also known as Commercial Liability) is often the first type of coverage businesses need. If you're operating without a legal entity (as a sole proprietor or in a general partnership), this insurance is a must. But even if your business is an LLC, you’ll still want general liability insurance to cover claims of injury, property damage, or lawsuits from third parties.

Commercial property insurance is vital for protecting the physical assets of your business, including buildings, equipment, inventory, and furnishings. This insurance coverage safeguards your property against various risks, such as fire, theft, vandalism, and certain natural disasters. 

If you have employees, Workers’ Compensation Insurance is typically required by law. This policy covers medical expenses and lost wages for employees who are injured on the job. In California and most other states, this insurance is mandatory, although there are some exemptions for certain types of employees.

To reduce costs, many businesses bundle their general liability and workers' comp policies. Speak with your insurance provider about options for cost-effective bundles that still offer adequate protection.

If you’re a consultant, doctor, lawyer, financial advisor, or any professional offering services or advice, Errors & Omissions (E&O) Insurance (also called Professional Liability) is a must. This insurance protects your business from claims of inadequate work or mistakes that could result in financial loss for your clients. Many industries, such as financial services, require E&O insurance to meet regulatory requirements.

For example, if you provide advice that leads to a client’s loss, E&O can cover both the damages and the legal fees involved in a lawsuit. Whether you’re a small business consultant or a larger service provider, this coverage ensures you're protected against professional missteps that could otherwise devastate your reputation and finances.

For manufacturers, distributors, or any business involved with physical products, Product Liability Insurance is essential. This type of coverage is designed to protect against claims that arise from defective products, design flaws, or insufficient safety warnings. Even a minor oversight in labeling can lead to a lawsuit if it results in injury.

Whether you produce, sell, or alter a product, there’s always a risk that something could go wrong. This insurance doesn't cover product recalls but protects you from the lawsuits related to injury or damage caused by a defective product.

If you use a vehicle for business purposes—whether it’s for deliveries or transporting equipment—you'll needCommercial Auto Insurance. Personal auto insurance won’t cover business-related accidents, and the higher limits on a commercial policy can help you avoid financial ruin after an accident.

This insurance is necessary for businesses with vehicles, trucks, or trailers. Even a single collision can result in a lawsuit that could bankrupt your business if you don’t have the right protection.

Choosing the right insurance is essential for managing risk effectively. Let’s cover how you might find a provider, choosing the right policy and how to use it, if heaven forbid something happens.

Start by assessing your specific liabilities and what you can afford in terms of premiums. Consider consulting trustworthy referrals, industry publications, and your local chamber of commerce to find reputable insurers and agents. 

Weigh the benefits of larger companies with extended customer service hours against smaller agencies where you can build personal relationships. When comparing quotes, ensure you evaluate similar coverage items, deductibles, and limits to find the best fit for your business needs.

When assessing potential insurance policies, the coverage must make sense relative to the premium and replacement costs. If the coverage doesn’t adequately cover potential losses or the premium is too high, it may not be a viable option. Keep in mind your deductibles and out-of-pocket expenses when filing a claim. 

You might also want to check if your home insurance can provide any coverage for your business. A comprehensive spreadsheet can help you compare essential details from multiple insurers, ensuring you make an informed decision based on the most relevant factors.

Once you’ve secured your insurance, store your policies in a safe yet accessible place. Keeping both physical and cloud copies ensures you can easily access the information in case of a claim or other needs. This dual-access approach protects you from losing vital documents if your primary system becomes unavailable. 

Regularly review your policies and consult with your agent to ensure that your coverage remains adequate and relevant. This proactive management will help you navigate any potential claims with confidence and clarity.

Insurance may not be the most exciting topic of business but is one of the most necessary when it comes to managing risk. As a business owner, preparation from the start of the process before you start up is the best way to protect your investment (your business) as it grows. This could be as easy as working with your current provider, getting insured quickly and correctly.