Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.

If you’re running a business, you should definitely have insurance. What type(s) of insurance you’ll require, however, depends on the sort of business you’re operating. Prior to spending very much time in exploring the potential of your amazing startup idea, be sure to check on the insurance you’ll need in order to adequately protect both yourself and your company.

Why You Need Business Insurance

As an entrepreneur and business owner, you assume certain industry-dependent liabilities. Business insurance is simply a means of mitigating some of those risks. For example, amusement parks carry a range of business insurance coverage to protect against possible losses stemming from any ride-based injuries. Should such an event occur, the park’s lawyers will file an insurance claim and the insurance company, after conducting its own investigation, will cover both the direct and indirect costs of injury. While the business may very well experience an increase in their insurance premiums, the business will survive.

While utilizing certain legal structures to form a business may confer a limited amount of protection for your personal assets, it does not necessarily limit the business’ liability. A business insurance policy can help to protect a business when it’s found to be liable for a loss.

Types of Business Insurance to Consider

Although not every business will require each of the following insurance types, it’s important to be aware of each in order to ensure that you’re properly protected:

General Liability Insurance

The most basic sort of business insurance, general liability insurance helps to protect businesses in the event of their product or employees causing bodily harm or property damage to a consumer. General liability policies can be customized to suit the needs of the specific business. Some businesses, such as contractors, are required to carry general liability insurance.

General liability insurance or commercial general liability insurance covers:

  • Bodily injury caused to an individual because of a product or employee’s actions
  • Damage done to property because of a product or employee’s actions
  • Personal injury done to an individual, including slander and libel
  • Damage done by false or misleading advertising

Premiums are dependent on both the business type and sales. Those with a higher risk will be assigned correspondingly higher premiums. Risk is determined by industry, state and federal laws, the likelihood of claims, the stability of the business, and many more factors. If you take precautions to lower your risk, you may be able to reduce your rate.

Business Property Insurance

Property insurance helps to protect any buildings and equipment owned by the company. Additionally, it can protect against business interruptions caused by the damage to or theft of property or equipment. Business property insurance is sometimes packaged with general liability insurance.

If you’re operating a business out of your home, it’s important to verify whether your homeowner’s policy covers your business property. If not, you may require additional coverage.

As your business grows, you should periodically assess your coverage levels and ensure that appropriate increases are made when you add equipment or property.

Professional Liability Insurance

Individuals such as doctors, dentists, accountants, lawyers, mechanics, or other professionals who provide services to their customers should carry professional liability insurance (also known as ‘Errors and Omissions’ insurance) in order to protect against financial penalties incurred by findings of malpractice and negligence.

Product Insurance

Ever wonder why companies with large recalls rarely go out of business? It’s most likely due to the fact that they have product insurance in place to protect against just such a situation. Product insurance protects manufacturers, distributors, and retailers who may face a financial loss because of a defective product.

Commercial Auto Insurance

If you’re using your car for work purposes or are planning to purchase vehicles for your enterprise, you ought to consider commercial auto insurance. For organizations that permit or require their employees to use personal automobiles for work purposes, non-owned auto liability insurance can help to protect the business in the event of an automobile accident.

Worker’s Compensation

Businesses which employ others should carry worker’s compensation coverage in order to assist with employee medical treatment in the event of on-the-job injuries. If you have an employee who receives a W2, you should have worker’s compensation coverage.

Data Breach Insurance

With multiple large internet attacks in recent memory, it’s more important than ever to note the availability of data breach insurance. Companies which retain customers’ private data should consider purchasing protection against financial loss experienced as a result of a breach.

Business Owner’s Policy

Some brokers will offer a Business Owner’s Policy (BOP) which packages various sorts of business insurance in order to meet the needs of a specific business owner. Whether a business will qualify for such a package depends on its industry. Some insurance types such as commercial auto or worker’s compensation aren’t available in a BOP.

How to Obtain the Insurance You Need

If you have friends in the industry, ask them to recommend a reputable insurance broker. If not, contact your personal insurance agent and see whether they represent business insurers or are willing to recommend someone who does.

Once you’ve located a few likely insurance brokers, plan to discuss your needs with each and compare their respective costs, offered packages, and levels of customer service. As with any other purchases, both personal and business, base your assessment on a combination of factors and then select the vendor that you believe will best suit your individual needs.

In any case, make sure that your business is adequately protected with the appropriate type(s) of insurance for your industry and exposure.

About the Author

Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (

Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.

Most importantly, he is the incredibly blessed husband of one amazing wife and father of six wonderful children. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to