The six policies most small businesses consider
General liability
The SBA describes general liability as coverage for any business. It pays for bodily injury and property damage you cause to others, medical expenses, libel and slander claims, legal defense and settlements or judgments.
Business owner's policy (BOP)
A BOP bundles the typical coverages, general liability and commercial property, into one package; some, such as The Hartford's Spectrum BOP, also include business income coverage. The SBA notes that a BOP can simplify buying and save money. If you own equipment, inventory or furniture worth protecting, a BOP is usually the starting point.
Professional liability (errors and omissions)
Professional liability covers claims that your work or advice caused a client financial harm through mistakes, negligence or malpractice. The SBA recommends it for service providers, and NerdWallet notes that Hiscox targets consultants, freelancers and accountants with it.
Workers' compensation
Workers' comp pays medical bills and lost wages for employees hurt on the job. The SBA says businesses with employees are required to carry workers' compensation, unemployment and, in some states, disability insurance, with the specific rules set by each state. Nearly every state requires workers' comp once you have employees, but Texas is a notable exception where most private employers can choose not to carry it. Only five states (California, Hawaii, New Jersey, New York and Rhode Island) require state disability insurance. Check your state's requirements as soon as you plan to hire.
Commercial auto
If you drive for work beyond your commute, your personal car policy may not cover you. Insureon notes that personal auto insurance only covers personal use, not work-related driving beyond your commute. Commercial auto covers business-owned vehicles. If employees use their own or rented cars for work, hired and non-owned auto (HNOA) coverage can often be added to a commercial auto or general liability policy at relatively low cost.
Cyber insurance
Cyber insurance covers costs from data breaches and attacks. The Hartford's small business cyber policy, for example, covers lost income from a ransomware shutdown, liability for other people's data lost in a breach, data and network restoration, incident response such as forensics and public relations, and regulatory inquiries. If you store customer payment or personal data, ask about it.
What small business insurance costs
Insureon's figures come from 100,000 small businesses that bought policies through its marketplace. They skew small: 57% have one employee, 53% earn under $100,000 a year in revenue, and 69% have been in business five years or less. Use them as a benchmark for very small firms.
| Policy | Median monthly cost | Approx. per year |
|---|---|---|
| General liability | $45 | $538 |
| Workers' compensation | $54 | $648 |
| Business owner's policy | $83 | $990 |
| Professional liability / E&O | $88 | $1,056 |
| Cyber | $129 | $1,548 |
| Commercial auto | $245 | $2,940 |
Source: Insureon small business insurance cost data (updated Feb. 6, 2026) and commercial auto cost data (updated Mar. 4, 2026). Annual figures for general liability and BOP are Insureon's; others are our monthly × 12 calculations.
Ranges are wide. Insureon reports commercial auto premiums from under $375 to more than $16,000 a year. Your cost depends on:
- Industry risk. Retail and healthcare typically pay more than office-based businesses.
- Limits and deductibles. Higher limits cost more; a higher deductible lowers the premium if you can afford to pay it after a claim.
- Size. More revenue and more employees generally mean higher premiums.
- Location and property. Local crime rates, property values and state rules matter. Replacement-cost property coverage costs more than actual cash value.
- Claims history and safety. Past claims raise rates; safety practices, security systems and staff training can reduce them.
Business insurers compared
| Insurer | How you buy | Sourced facts |
|---|---|---|
| ERGO NEXT (NEXT Insurance) | Online | AM Best A+ (Superior) group rating tied to Munich Re; nearly 750,000 small business customers; BOP in 41 states; covers 1,300+ professions |
| The Hartford | Online or agent | More than 1 million small business customers; Spectrum BOP; cyber sold in all states except Alaska, Louisiana and Vermont |
| Hiscox | Online or agent | AM Best "Excellent"; GL, BOP, professional liability and cyber online; 14-day money-back refund; not available to Alaska businesses |
| State Farm | Local agents | BOP, commercial auto, workers' comp, umbrella, professional liability, EPLI and bonds; serving small businesses since 1935 |
| Chubb | Broker or agent | AM Best A++ (Superior); high coverage limits; generally priced higher than many small business insurers |
Sources: ERGO NEXT press release (Sept. 2025), The Hartford press release (Sept. 2025), NerdWallet Hiscox review (Feb. 2026), State Farm, AM Best/Business Wire (Jan. 2026), FitSmallBusiness (2026).
ERGO NEXT
NEXT sells entirely online and was fully acquired in 2025 by ERGO, the primary insurer of Munich Re. AM Best rates it A+ (Superior), a rating that reflects Munich Re's financial strength. It offers a standalone professional liability policy for consultants and multi-location workers' comp. It may suit owners who want to quote, buy and download a certificate of insurance quickly. FitSmallBusiness notes limited options for high-risk industries.
The Hartford
The Hartford's small business unit serves more than 1 million customers. Its Spectrum BOP covers property, general liability and business income, and its cyber product includes a 24/7 U.S.-staffed incident hotline. It may suit businesses that want most coverages, including workers' comp and commercial auto, from one carrier.
Hiscox
Hiscox focuses on service businesses such as consultants, freelancers and accountants, and sells general liability, BOP, professional liability and cyber online. It offers up to 5% off for buying two or more products. Workers' comp is placed through The Hartford, and commercial auto through a partner. NerdWallet found Hiscox drew far more state regulator complaints than expected for its size from 2022 to 2024, mainly over general liability and commercial property claims, so weigh service as well as price.
State Farm
State Farm sells business coverage through local agents, which may suit owners who want in-person advice or who already bundle home and auto there. Its lineup includes a BOP, commercial auto, workers' comp and a commercial liability umbrella. Prices are based on rating plans that vary by state.
Chubb and marketplaces
Chubb carries AM Best's top A++ rating and offers high limits, which may suit growing firms with larger risks, though it tends to cost more. Marketplaces such as Insureon and Simply Business compare quotes from several insurers with one application; they aren't insurers themselves, so the carrier you pick handles claims.
Who needs what
| Business type | Coverage to consider first |
|---|---|
| Freelancer or consultant working from home | Professional liability; general liability; home-based business rider or BOP for equipment |
| Retail shop or restaurant | BOP (liability, property, business income); workers' comp with staff; product liability if you sell goods |
| Contractor or tradesperson | General liability; commercial auto; workers' comp; tools and equipment coverage |
| Business with employees | Workers' comp, unemployment insurance and, in five states, disability insurance, as your state requires |
| Business storing customer data | Cyber insurance |
| Staff driving own cars for work | Hired and non-owned auto coverage |
Based on SBA and Insureon coverage descriptions.
Forming an LLC or corporation doesn't remove the need for insurance. The SBA notes that business-entity protection for personal assets has limits, and insurance helps fill the gaps.
How to buy business insurance
- List your risks. The SBA suggests thinking through accidents, natural disasters and lawsuits that could hurt your business, including seasonal risks where you operate.
- Check contracts and state rules. Read any lease, client contract or loan agreement for insurance requirements, and confirm your state's rules for employers. If you're applying for financing, see our guide to small business loans.
- Get at least three quotes. The SBA notes that rates, terms and benefits can vary significantly. Use a licensed agent, an online insurer, a marketplace or a mix.
- Compare like for like. Match limits, deductibles and exclusions, and check each carrier's AM Best rating.
- Budget for premiums. Build the cost into your plan alongside other overheads. Our small business finance hub and guide to building business credit cover related steps.
- Re-assess every year, and whenever you hire, buy equipment, add vehicles or expand.
Frequently asked questions
What insurance does a small business legally need?
The SBA says businesses with employees must generally carry workers' compensation and unemployment insurance, plus disability insurance in the five states that require it (California, Hawaii, New Jersey, New York and Rhode Island). Rules are set by each state; Texas, for example, doesn't require most private employers to carry workers' comp. Other coverage, like general liability, may be required by a lease, client contract or lender.
How much does small business insurance cost?
Insureon's 2026 data shows median monthly costs of $45 for general liability, $54 for workers' comp, $83 for a business owner's policy, $88 for professional liability, $129 for cyber and $245 for commercial auto. Your price depends on industry, size, location and claims history.
What is a business owner's policy?
A BOP bundles general liability and commercial property coverage, often with business income coverage, into one policy. The SBA notes it can simplify buying and save money compared with buying coverages separately.
Does my personal car insurance cover business driving?
Often not. Insureon notes personal auto insurance covers personal use, not work-related driving beyond your commute. You may need commercial auto, or hired and non-owned auto coverage if employees use their own cars.
Do I need professional liability if I have general liability?
If you provide advice or professional services, usually yes. General liability covers injuries and property damage; professional liability covers claims that your work, advice or mistakes caused a client financial loss.
Does an LLC protect me so I don't need insurance?
No. The SBA notes that LLC or corporate status can protect personal assets from some lawsuits, but that protection has limits, and insurance helps fill the gaps.