What are the 5 most common types of business insurance?

Running a business comes with various risks—some of which can lead to significant financial losses if not properly managed. One of the most effective ways to protect your business is through business insurance. Insurance can safeguard your business from unexpected events, liabilities, and accidents, ensuring that you’re not left vulnerable.

Here are the five most common types of business insurance that every business owner should consider:

1. General Liability Insurance

General Liability Insurance is essential for any business, whether you’re a startup or an established company. This type of insurance covers third-party claims for bodily injury, property damage, and personal injury resulting from your business operations.

In fact, nearly 40% of small businesses experience a general liability claim in any given year, and the average cost of a claim can exceed $30,000.

For example, if a customer slips and falls in your store or if one of your employees accidentally damages a client’s property, general liability insurance can cover the associated legal costs and settlements.

2. Commercial Property Insurance

Every business has assets that are crucial to its day-to-day operations. Commercial Property Insurance protects your physical assets, including your building, equipment, and inventory, from risks such as theft, fire, vandalism, or natural disasters like earthquakes and floods.

The average cost of a fire damage claim is about $35,000, and commercial property insurance can help cover the repair or replacement of damaged property, which can help your business recover quickly without having to bear the full financial burden.

3. Professional Liability Insurance (Errors and Omissions Insurance)

If you provide services to clients, whether you’re a consultant, lawyer, or accountant, Professional Liability Insurance (also known as Errors and Omissions Insurance) is crucial. This insurance protects your business from legal claims due to mistakes, negligence, or omissions in the services you provide.

Approximately 1 in 5 small businesses face a professional liability claim during their business lifespan, and the average legal costs can exceed $50,000 per claim.

For instance, if a client sues your business for not meeting their expectations or for a professional error, this insurance covers the costs of legal defense and potential settlements.

4. Workers’ Compensation Insurance

Workers’ Compensation Insurance is mandatory in most states for businesses with employees. It provides coverage for employees who are injured on the job, covering their medical expenses and lost wages while they recover.

On average, a workers’ compensation claim can cost $30,000 or more depending on the injury. This type of insurance helps protect your business from lawsuits that may arise if an employee is injured while working. It also ensures that your employees receive the necessary care to recover and return to work.

5. Business Interruption Insurance

Business Interruption Insurance helps protect your business if it’s forced to shut down temporarily due to a covered event, such as a natural disaster, fire, or other significant incidents.

The average cost of business interruption losses can range from $2,000 to $3,000 per day for small businesses. This insurance compensates for lost income during the downtime and can help cover operating expenses, such as rent and utilities, while your business gets back on its feet. This ensures that your cash flow remains steady, even during difficult times.

🛡️ Get the Right Coverage for Your Business

Protecting your business with the right insurance policies is a smart move that can save you from financial hardships down the line. At Toby Hansen Agency, we understand the unique needs of every business and offer tailored insurance solutions that cover what matters most.

Get a free quote today and let us help you find the best insurance coverage for your business—whether you need general liability, workers’ compensation, or more specialized protection.

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