Starting a Business Insurance Checklist

Starting a business exposes you to new risks that personal insurance doesn’t cover. Use this checklist to ensure you have the right business insurance protection from day one.

Before Opening for Business

Assess Your Risks

  • Identify potential liability risks (customer injuries, product defects)
  • List business property and equipment that needs coverage
  • Determine if you’ll have employees
  • Consider professional liability risks (errors, advice, services)
  • Evaluate cyber risks if handling customer data

Required Insurance (Often by Law)

  • Workers’ compensation (required in most states if you have employees)
  • Commercial auto insurance (required if using vehicles for business)
  • Professional liability (required for some licensed professions)
  • Check state and local requirements for your industry

Choose a Business Structure

  • Understand how LLC, corporation, or sole proprietorship affects liability
  • Note: Business insurance is still essential even with an LLC
  • Personal assets may still be at risk without proper coverage

Essential Business Insurance Policies

General Liability Insurance

  • Protects against third-party bodily injury claims
  • Covers property damage caused by your business
  • Includes personal injury (slander, libel, false advertising)
  • Typical limits: $1 million per occurrence / $2 million aggregate
  • Often required for commercial leases and contracts

Business Owner’s Policy (BOP)

  • Bundles general liability + commercial property insurance
  • Usually 15-20% cheaper than buying separately
  • Good option for small businesses with physical location
  • May include business interruption coverage

Commercial Property Insurance

  • Covers building (if you own it)
  • Covers business personal property (equipment, inventory, furniture)
  • Includes damage from fire, theft, vandalism, weather
  • Consider replacement cost vs. actual cash value coverage

Professional Liability (E&O Insurance)

  • Essential if you provide professional services or advice
  • Covers claims of negligence, errors, or omissions
  • Required for: lawyers, accountants, consultants, healthcare providers
  • Recommended for: tech companies, marketing agencies, contractors

Workers’ Compensation

  • Required in almost every state if you have employees
  • Covers medical costs and lost wages for work injuries
  • Protects you from employee lawsuits for workplace injuries
  • Rates vary by industry and state

Employment Practices Liability (EPLI)

  • Covers claims of wrongful termination, discrimination, harassment
  • Increasingly important as employment lawsuits rise
  • Consider if you have or plan to hire employees

Health Insurance for Employees

  • Required for businesses with 50+ full-time employees (ACA)
  • Optional for smaller businesses, but helps with recruitment
  • Consider SHOP marketplace for small business health plans
  • May qualify for small business health care tax credit

Specialized Coverage to Consider

Cyber Liability Insurance

  • Essential if you handle customer data, credit cards, or health info
  • Covers data breach response costs and liability
  • Includes ransomware and cyber extortion coverage
  • Increasingly important for all businesses, even small ones

Business Interruption Insurance

  • Replaces lost income if you can’t operate (fire, natural disaster)
  • Often included in BOP or can be added as endorsement
  • Calculate how long you could survive without income
  • Review coverage triggers and waiting periods

Product Liability Insurance

  • Essential if you manufacture, distribute, or sell products
  • Covers claims of injury or damage caused by your products
  • May be included in general liability or require separate policy
  • Retailers may require it from suppliers

Commercial Auto Insurance

  • Required if you own business vehicles
  • Covers vehicles used for business purposes
  • Personal auto policies typically exclude business use
  • Consider hired and non-owned auto coverage for employee vehicles

Protecting Yourself as the Owner

Personal Insurance Updates

  • Review personal health insurance needs (may lose employer coverage)
  • Get disability insurance (your income is now at greater risk)
  • Update life insurance to cover business debts and succession
  • Consider key person insurance for critical employees

Separation of Personal and Business

  • Keep business insurance separate from personal policies
  • Don’t rely on homeowners policy for home-based business
  • Understand what personal assets are at risk

Industry-Specific Considerations

Contractors and Construction

  • Contractor’s license bond
  • Builder’s risk insurance
  • Tools and equipment coverage
  • Completed operations coverage

Retail Businesses

  • Product liability coverage
  • Shoplifting and theft protection
  • Signage and glass coverage

Professional Services

  • Professional liability (E&O) is essential
  • Consider higher liability limits
  • May need tail coverage if changing carriers

Food Service and Restaurants

  • Liquor liability (if serving alcohol)
  • Food contamination coverage
  • Equipment breakdown insurance

Common Mistakes to Avoid

  • Don’t assume personal insurance covers business activities
  • Don’t skip workers’ comp (personal liability if uninsured)
  • Don’t underestimate liability limits needed
  • Don’t forget about cyber risks (even small businesses are targets)
  • Don’t wait until you’re sued to get coverage

This checklist is for educational purposes. Consult with a licensed insurance professional for advice specific to your situation.