You've registered your LLC, opened a bank account, and built your website. But have you protected the business itself? Here's the insurance checklist every new owner needs.
General liability is the first policy every business should buy. It covers the most fundamental risks: a customer is injured because of your operations, you damage someone else's property, or you're sued for defamation or advertising injury. Almost every commercial lease, client contract, and vendor agreement requires it.
If you do nothing else, get GL. A $1M/$2M policy for a low-risk small business costs $400–$800/year. That's less than $70/month for protection against claims that could otherwise bankrupt you before you even get started.
If you're leasing office space, opening a storefront, or operating out of a warehouse, upgrade from standalone GL to a Business Owner's Policy. A BOP bundles GL with commercial property insurance (covering your equipment, inventory, and improvements to the space) and business interruption coverage (covering lost income if a covered event forces you to close).
Your landlord's insurance covers the building structure — not your stuff inside it. If a pipe bursts and destroys your inventory, your landlord's policy won't pay for it. Your BOP will. The cost difference between standalone GL and a BOP is often just $100–$300/year.
The moment you hire your first W-2 employee, you need workers' compensation insurance in almost every state. It covers medical expenses and lost wages if an employee is injured on the job. It's not optional — operating without it is illegal and carries fines, criminal penalties, and personal liability for any workplace injuries.
Even if your employees do 'safe' office work, workers' comp is required. Carpal tunnel, slip-and-fall injuries, and even stress-related claims can trigger workers' comp. The cost is based on payroll and job classification — for office workers, it's roughly $0.20 per $100 of payroll, which works out to about $100/year per employee.
If any vehicle is used for business purposes — driving to client sites, hauling materials, making deliveries — you need commercial auto insurance. Your personal auto policy has a business-use exclusion that can result in denied claims if you're in an accident while working.
This applies even if you use your personal car. If you're driving to a client meeting and cause an accident, your personal insurer can deny the claim because the trip was business-related. Commercial auto covers the vehicle regardless of who's driving it and regardless of the trip purpose. If you have employees who drive, this is non-negotiable.
If your business involves giving advice, providing consulting, designing, building, or delivering any professional service, you need professional liability insurance (also called errors & omissions or E&O). It covers claims alleging that your work was negligent, incomplete, or caused financial harm to a client.
This includes: consultants, accountants, architects, engineers, IT providers, marketing agencies, real estate agents, financial advisors, and anyone whose work product could cause a client to lose money. The average E&O claim costs $120,000 to defend and settle. For a new business, that's an existential threat.
Some coverages aren't urgent on day one but become critical as you grow. Cyber liability insurance should be added as soon as you're handling customer data (credit cards, emails, health records). EPLI (employment practices liability) becomes important once you have 5+ employees. An umbrella policy makes sense once your revenue or contract values exceed your primary policy limits.
The mistake most new owners make is waiting until they 'need' these coverages — which usually means waiting until a claim forces the issue. The best time to add coverage is before you need it. The second-best time is now.
Day one: General liability (or BOP if you have a physical location). Before first hire: Workers' compensation. Before using any vehicle for business: Commercial auto. Before delivering professional services: Professional liability / E&O. As soon as you handle customer data: Cyber liability. At 5+ employees: Consider EPLI. When contracts require higher limits: Umbrella policy.
An independent agent can help you prioritize based on your specific business, industry, and budget. At risk | x, we build insurance programs for new businesses every week — we know what you need now, what can wait, and what's going to matter six months from now.
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