Small business owners have lots of decisions to make — and what insurance to carry is one of the hardest to get right. There are many options to consider because insurance requirements vary by state. With sound information in hand, you can make well-informed decisions and be confident that you’ll have the right insurance protection for your business when things go wrong.

This guide discusses some of the main types of insurance you need as a small business.

Small business owners encounter a myriad of risks daily: a customer slips in the shop, an employee gets hurt on the job, a laptop is stolen from a job site, a ransomware attack shuts down operations for a week. Incidents like these can damage both a business’s finances and its reputation.

Then there are the physical threats to a business’s property and equipment. A fire or windstorm, for example, can damage its facility or equipment, leaving the business to cover the cost of repairs or replacement. While operations are shut down or scaled back, business income is likely to suffer – even as bills like payroll and rent continue to come due.

Forming an LLC or corporation shields an owner’s personal assets from many business liabilities — but that protection has limits. That’s why business owners typically assemble a portfolio of insurance policies aligned with a business’ risks based on their industry, customers, physical footprint, and data and privacy exposures, that can provide much needed relief from risks.

Here, we examine the fundamental insurance coverage for small businesses.

General liability (GL) insurance — sometimes called commercial general liability (CGL) responds to claims by third parties alleging bodily injury, property damage, and personal or advertising injury arising out of the insured’s normal business operations. Some examples:

• A customer slips on a wet floor in your shop and breaks a wrist. The GL policy can pay medical bills and/or legal fees arising from the incident.
• Your contractor damages a client's flooring while installing a fixture. The GL policy can cover repair costs.
• A competitor sues you for allegedly disparaging their product in an ad. The GL policy can pay legal defense costs in claims of libel or slander.
   

While GL coverage is not federally mandated, commercial landlords, clients, and lenders often require it in leases and contracts.

Commercial property insurance covers the physical assets a business owns or leases — buildings, inventory, equipment, furniture, outdoor signage or fencing against incidents such as fire, theft, vandalism, wind, and hail. When comparing policies, it is important to consider whether coverage is provided on a replacement cost or actual cash value basis. Replacement cost basis pays to replace damaged property with new equivalent property, while payouts on actual cash value policies subtract depreciation.

Rather than purchasing stand-alone property insurance, many business owners opt to bundle it with other key coverages in a Business Owner's Policy (BOP) for cost savings and efficiency.

Designed for small and mid-sized businesses, a BOP combines general liability, commercial property and business income insurance into one single insurance policy. It’s a convenient approach that can be tailored to meet individual needs.  

A standard BOP combines three coverages:

• Property insurance for buildings, business contents, stock, equipment and other physical property owned by the business.
• Business income insurance, which replaces lost income and covers extra expenses when a covered cause of loss — such as fire, theft, or wind damage — disrupts the insured’s business operations.
• Liability insurance for legal liability the business faces for bodily injury, property damage, or personal and advertising injury caused by its operations, products, or services.
   

Coverage terms, conditions, and availability vary by state and policy. Coverage is subject to the language of the policies as actually issued.

Chubb's BOP is designed for small businesses with up to $30 million in revenue across more than 1,000+ business classes, including artisan contractors, healthcare, technology, retail, food services, financial services, manufacturing and artisan contractors. Optional endorsements can add coverage for privacy and data breaches, equipment breakdown, hired and non-owned auto and professional liability for professions such as veterinarians, opticians, and funeral directors.

In the U.S., nearly every state requires employers to carry workers’ compensation insurance. Workers' compensation pays for medical care, lost wages, and death benefits for an employee that is injured as a direct result of their job.^[i] While workers are entitled to medical benefits and lost wages as a result of a work injury, a worker may still sue the employer in workers’ compensation court or its equivalent in many states to claim additional monetary benefits for a permanent disability alleged to have been caused by the work injury. Workers’ Compensation insurance insulates an employers from absorbing the cost that may ensue from a work injury.

Personal auto policies typically exclude vehicles used primarily for business.  Any business that owns vehicles and/or has employees that regularly drive as part of their job needs commercial auto coverage.

A commercial auto policy generally covers:

• Liability for bodily injury and property damage caused by a business-owned vehicle.
• Physical damage to the vehicle itself (collision and comprehensive).
• Medical payments or personal injury protection.
• Uninsured and underinsured motorist protection.
   

Hired and non-owned auto coverage is an endorsement that extends coverage to apply to employees that drive their own cars for work. Many business owners mistakenly believe that personal auto policies will respond in these cases and are surprised to find it does not when a claim occurs.

Chubb's commercial auto insurance for small businesses includes physical injury protection and uninsured/underinsured motorist limits up to $1 million, along with endorsements that add optional coverages, where permissible, such as hired and non-owned auto, rental reimbursement and auto loan/lease gap coverage.

Professional liability insurance, also known as errors and omissions (E&O) coverage, insures service businesses and professionals in claims alleging their professional advice or services caused a customer financial harm — whether through actual mistakes, alleged errors, or failure to perform a service.

Unlike general liability insurance, which responds to physical injury and property damage, professional liability responds when economic losses arise – or are alleged – from professional services. For example, a client says your advice cost them a deal, or your software mistake caused a costly shipment delay for a client. A professional liability policy can cover unexpected legal fees arising from claims, whether the business is at fault or not, and provide support for the business through arbitration or litigation.

Any business that provides guidance, information, or knowledge-based services can benefit from this coverage – from bookkeepers and marketing consultants to executive recruiters. Specialized policy forms are available for law firms, architects, engineers, and software developers. Media liability policies are customized for the unique intellectual-property exposures of publishers and broadcasters.

Many corporate service contracts require vendors to carry professional liability coverage, so in addition to providing protection against loss, E&O insurance is often a prerequisite for winning business.

Chubb's Pro ERM℠ is a fully integrated solution that enables professional service firms to manage and insure the growing exposures that companies face in the digital era. Pro ERM is an expansion of Chubb’s comprehensive Cyber ERM policy that gives organizations of all sizes an enterprise risk management solution to address professional, media, and cyber exposures.

Did you know that 53% of Chubb’s reported claims in 2025 were for companies under $150M in revenue? And according to a survey conducted by QuickBooks, 37% of ransomware victims have fewer than 100 employees. As an LLC or small business owner, it’s important to take the necessary steps to protect your business against Cyber threats.

Regardless of the industry or size, organizations face unique cyber exposures. Chubb’s holistic approach to cyber risk management is designed to address key risks—from liability arising from the compromise of sensitive records to business interruption loss following a cyber incident —subject to the policy’s terms, conditions, and limits.

Cyber insurance responds to two major categories of losses arising from a cyber-attack or data breach:

• First-party costs — expenses a business incurs after an incident, such as forensic investigation, customer notification, credit monitoring, public relations, and (contingent) business interruption costs.
• Third-party costs — the legal liability the business faces arising from a failure to protect Personal Information or prevent a network security event, including claims from customers or partners, and costs associated with regulatory proceedings.
   

Chubb, a leader in cyber protection for nearly three decades, pairs cyber insurance with a curated suite of services designed to help small businesses detect and prevent cyber incidents. 

Management liability is a broad category of insurance designed to insure an organization’s leaders and executives in claims arising from company governance, decisions and activities – claims that are not covered under general liability policies.

The seven key management liability coverage types include:

Directors and officers (D&O) liability: Protects the personal assets of leaders and the organization itself in claims alleging "wrongful acts" in management or governance.

Employment practices liability (EPL): Responds to employment-related claims of harassment, discrimination, wrongful termination, retaliation, defamation, unfair hiring practices, and other workplace torts.

Fiduciary liability: Insures the organization, its benefit plans and fiduciaries against exposures arising from breaches of fiduciary duty and allegations of errors and omissions in the administration of benefits plans.

Employed lawyers liability: Provides insurance protection to in-house lawyers and their staff in claims of errors or omissions in legal services they perform for their organization.

Crime insurance: Insures against financial losses resulting from internal or external theft, fraud, or embezzlement.

Kidnap, ransom, and extortion: Covers costs associated with threats and incidents involving the kidnapping or extortion of employees or organization assets.

Workplace violence expense: Reimburses expenses resulting from incidents of workplace violence, such as crisis management and public relations consulting and medical and mental health services for those impacted by the event.

Chubb’s ForeFront Portfolio^®, enables small businesses to pick and choose any or all of these management liability coverages to address their unique risks.

Several specialized coverages can be important for growing companies and those in certain industries.

• Product liability insurance insures manufacturers, wholesalers, distributors, and retailers in claims that a defective product caused injury or property damage.
• Commercial umbrella insurance sits above a primary liability policy to provide an additional layer of coverage for large claims that exceed underlying general liability limits.
• Home-based business insurance can be added to a business owner’s homeowner's policy to cover a modest amount of business equipment and third-party liability when they run their business from home.
• Foreign package policies cover U.S.-based small businesses that conduct company-sponsored work overseas, addressing the unique risks associated with business operations or employee business travel around the world.

Where do you begin to build your small business insurance program? 

1. Handle what the law requires — workers' compensation, unemployment, and disability for any state where you have employees.
2. Add a BOP to secure property, business interruption, and general liability in one policy.
3. Add commercial auto for any business-owned vehicles and hired/non-owned auto when employees drive personal vehicles for work.
4. Add cyber insurance, especially if you store customer or client data, process payments, or contract with larger vendors that require it.
5. Add professional liability if you provide professional advice, expertise, or services and a client could allege financial harm.
6. Add management liability, where it makes sense after considering your risks – recognizing that it can be essential to protect not only the assets of your business but also the personal assets of business owners and executives.
7. Consider layering an umbrella, given that severe liability incidents can leave a small business exposed to costs that can bankrupt them.
    

An experienced commercial insurer, broker or agent can be an indispensable resource in navigating this process – helping to assess your exposure based on your business, industry, and jurisdictions and determine the limits, deductibles, and endorsements best for your business.

Chubb, a world leader in insurance, provides insurance for small businesses across more than 1,000+ business classes. Our coverage is tailored for small business risks and designed to scale as businesses grow (Chubb).