Business Insurance: What's Covered and What Isn't

It varies by state and situation, but the most common legal requirement is workers' compensation once you have employees — mandatory in nearly every state. Commercial auto is required if the business owns vehicles. General liability isn't usually legally mandated, but it's often required by landlords, clients, and contracts. Licensed professions may be required to carry professional liability. Check your state and any contracts you sign.

General liability covers third-party bodily injury and property damage claims. A Business Owner's Policy (BOP) bundles general liability with commercial property (and usually business-interruption) coverage at a lower combined cost — ideal for many small businesses with a location or equipment. If you have property to protect, a BOP is usually the better value; if you're a service business with few assets, standalone general liability may be enough.

In most states, yes — workers' comp is generally required once you have at least one employee, though the exact threshold and rules vary (a few states set it at a higher employee count, and rules differ for corporate officers and contractors). It covers employees' medical costs and lost wages from work injuries and protects you from related lawsuits. Confirm your state's threshold with its workers' comp agency.

Not under general liability — you need professional liability (also called errors & omissions, or E&O). It covers claims that your professional advice or services caused a client financial harm, which general liability specifically excludes. Consultants, agencies, accountants, tech firms, and licensed professionals typically need E&O, and clients often require it by contract.

Often yes. A personal auto policy typically excludes or limits business use, so regular work driving — deliveries, client visits, hauling equipment — can leave a gap. Sole proprietors with occasional business use may add a business-use endorsement; businesses that own vehicles or drive frequently for work need a commercial auto policy. Confirm how your personal insurer treats business use before relying on it.

Only if you carry cyber liability coverage — standard general liability and BOPs generally exclude data breaches and cyberattacks. Cyber coverage helps with breach-response costs, notification, liability, and sometimes ransomware and business interruption. Any business that stores customer data, takes card payments, or relies on systems to operate should price it.