At minimum, most small business need to purchase at the following four business insurance policies.

Property Insurance

Property insurance compensates a business if the property used in the business is lost or damaged as he results of carious types of common perils, such as fire and theft. Property insurance covers not only the building and structures but also what insurers refer to as personal property, meaning office furniture, inventory raw materials, machinery, computers and other items vital to the business operation.  Depending on the type of policy, property insurance may include coverage of equipment breakdown, debris removal after a fire or other destructive event, some types of water damage and other losses. It may also provide operating funds during periods when your business is trying to get back on track after a catastrophic loss.

Liability Insurance

Every business can be sued.  This alone is reason enough to obtain appropriate business insurance policies.  Customers may claim that the business caused them harm as the result of defective product, error in a service or disregard for another person’s property.  They may also claim that your business created a hazardous environment. Liability insurance pays for damages for which the business is found liable, up to the policy limits, as well as attorneys’ fees and other legal defense expenses.  It also pays the medical bills of any person injured by or on the premises of the business.

Auto Insurance

This provides coverages for autos owned by the business.  The insurance pays any cost to third parties resulting in bodily injury or property damage for which the business is legally liable, up to policy limits.

Workers Compensation Insurance

In all states but Texas, employers must have workers compensation insurance when there is more than a certain number of employees, varying from three to five, depending on the state.  Workers compensation insurance pays for medical care and replaces a portion of lost wages for an employee who is injured in the course of employment, regardless of who is at fault for the injury.  When a worker dies as a result injuries sustained while working, the insurance provides compensation to the employee’s family.

Other Types of Business Insurance Coverage

Errors and Omissions/Professional Liability

If you are giving advice, making recommendations, designing items, providing physically care or representing others can lead to the business being sued by other for failure to perform the job properly causing injury.  Errors and Omissions/Professional Liability covers these situations and the policy will pay up to the policy’s limit. It also provides legal defense, even when there is no wrongdoing.

Directors and Officers Liability Insurance

Directors and Officers of corporations and not-for-profit organizations are protected if there is a lawsuit claiming they managed the business/organization without proper regard for the rights of others.  The policy will pay any judgement for which the insured is legally liable, up to policy limit. This include legal defense, even when there is no wrongdoing.

Key Employee Insurance

Life or disability income insurance can compensate a business when certain key employees die or become disable. These coverages cushion some of the adverse financial impact that result from losing key employee’s participation.

Umbrella Policies

Umbrella liability policies provides coverage over and above a business’ liability coverage.  It is designed to protect against high losses and when another policy has been used up. The umbrella policy provides protection after general liability and auto liability policies and possibly other business policies.