A single lawsuit, data breach or injured employee can do more damage than a bad year of sales. Forming an LLC or a company helps to separate your personal assets, but it does not stop the business itself from being sued, and it may not protect you from your own professional mistakes.
The main policies
- General liability: injuries and property damage to third parties, such as a client who trips in your office. Often the first policy asked for in a contract.
- Professional liability (errors and omissions): claims that your advice or work caused a client loss. Important for consultants, designers, accountants, developers and anyone selling expertise.
- Commercial property: your premises, equipment and stock. A home-based business usually needs its own cover because homeowner policies often limit business property.
- Business owner’s policy (BOP): a bundle of liability and property, often at a lower price for small firms.
- Workers’ compensation: required in most US states once you have employees, and rules vary by state.
- Commercial auto: personal car insurance can exclude business use, so check before sending anyone on deliveries.
- Cyber liability: breach response, notification costs and sometimes ransomware losses.
What sets the price
Insurers look at your industry, payroll, revenue, location, claims history and limits. Getting quotes from a broker who works with several carriers saves time and shows the market. Pay attention to “claims-made” versus “occurrence” wording, because it decides whether a past job remains covered once a policy ends.
A short decision list
- List what contracts, clients, landlords and laws require from you.
- Write down the worst realistic event in each area: injury, bad advice, breach, fire.
- Ask what each policy excludes, as well as what it includes.
- Review each year as revenue, staff and services change.
Freelancers and sole traders may need only one or two policies. Read client contracts first, since many large companies now specify minimum cover.