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What business insurance coverage do I need?

State law sets the minimums, but most companies need general liability before professional liability before management liability.

by Komodo 2 min read

Coverage Illustrative protection You likely need it if
General liability Injuries and property damage you cause You have an office, visit clients or sign contracts that require it
E&O Claims that your work or software caused a client loss You sell services or software to other businesses
Cyber Data breaches, ransomware and the costs that follow You hold customer data or run on email and cloud systems
D&O Lawsuits against your directors and officers You have outside investors or a board
EPL Claims of discrimination, harassment or wrongful termination You have employees
Crime Employee theft and payment fraud Your team can send payments or handle client money

What coverage does almost every business need?

Almost every business with an office, clients or contracts needs general liability, which the SBA describes as protection against bodily injury, property damage and the lawsuits that follow.

Do I need professional liability insurance?

You need professional liability if a mistake in your service or software could cost a client money; the SBA defines it as protection against losses from errors and negligence.

Do I need management liability insurance?

You need management liability once you have investors, employees or money moving through your accounts, because D&O, EPL and crime coverage protect the company and its leaders from those risks.

What coverage is required by law or contract?

State law sets the floor for employee coverage, and contracts usually set the limits, so check both before you choose coverage.

  • Workers' compensation, unemployment and disability insurance once you have employees, which the SBA lists as required; rules vary by state.
  • Limits named in your customer contracts and MSAs.
  • Coverage your office lease requires.
  • Coverage your investors or lenders require.

Once you know which lines you need, use the business insurance quote checklist to gather what carriers will ask for.

Sources and further reading

This guide is general educational information, not legal, tax, or insurance advice. Coverage depends on your business, the insurer's underwriting and the issued policy terms.