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What business insurance do I need? A checklist by risk
Match your exposures to coverage: what the law requires, what contracts demand, what could end the business and what is situational, with a checklist by risk.
Most businesses need general liability, property coverage for what they own or lease, and workers' compensation once they have employees. Beyond that, the right list depends on exposures: vehicles, professional advice, customer data, products, subcontractors, alcohol, equipment on the move. Build it in four tiers: what the law requires, what contracts and lenders require, what loss would end the business, and what is situational. The What business insurance do I need? on this site walks through the same questions and produces a list to take to a broker.
Start from exposures, not products
A broker who asks "BOP or general liability?" before asking what you do is selling a product. Start with what can go wrong in your business and how bad it can get. Write down:
- What you own or lease: building, tenant improvements, equipment, inventory, computers, signage, vehicles.
- Who can be hurt: customers on your premises, clients whose property you work on, the public near your jobs, your employees.
- What you sell: a physical product, a service, advice, software, access to data.
- Who depends on you: clients with contracts, lenders, landlords, investors, a board.
- What you could not survive: a three-month closure, a $2 million lawsuit, the loss of the one person who holds the key accounts.
That inventory is also what a broker needs for an application. risk management for small businesses: a practical framework and how to build a risk register take the same process further.
The four tiers
Tier 1: required by law. Workers' compensation in nearly every state once you have employees (thresholds and exemptions vary), state minimum auto liability for vehicles, short-term disability in a handful of states, and some licensed trades' bond or liability rules. is business insurance required by law? sorts these out, and workers' comp and benefits requirements by state gives the workers' comp and benefits rules by state.
Tier 2: required by contract, lease, lender or license. Commercial leases ask for general liability and property coverage, often naming the landlord as an additional insured. Customers and general contractors ask for liability limits, workers' comp and sometimes a waiver of subrogation. A lender on a commercial building requires property insurance and, if the building is in a special flood hazard area, flood insurance. These are not laws, but you cannot sign, open or borrow without them. Run each contract through the contract insurance requirements checker and read how to review the insurance requirements in a contract and insurance requirements in commercial leases.
Tier 3: the loss you could not absorb. This is where judgment comes in. If a fire would close you for four months, business income coverage belongs above a dozen smaller items. If a single injury lawsuit could exceed your liability limit, add an umbrella. Put the money on severity first and frequency second; small losses are cheaper to retain through a higher deductible.
Tier 4: situational coverage. Liquor liability if you serve alcohol, cargo if you haul others' goods, product recall if you manufacture consumables, event cancellation if you run one-day events, key person life insurance if the business depends on one owner.
The checklist by risk
Read down the left column and mark every line that is true for you.
| If this is true | Coverage to ask about | Guide |
|---|---|---|
| You rent or own space, equipment or inventory | Commercial property; business income and extra expense | commercial property insurance: what it covers and what it doesn't, business interruption insurance: how business income coverage works |
| Customers, vendors or the public are on your premises or work site | General liability | general liability insurance: what it covers and what it does not |
| You have any employees, including part-time | Workers' compensation; employers' liability; EPLI | workers' compensation insurance: how it works, Employment practices liability insurance (EPLI): what it covers |
| Anyone drives for the business, even their own car | Commercial auto or hired and non-owned auto | commercial auto insurance: what it covers and what it leaves out, Hired and non-owned auto (HNOA) coverage: what it covers and who needs it |
| You sell advice, design, software or a managed service | Professional liability (E&O); cyber | Professional liability (E&O) insurance explained |
| You store customer data, accept cards or send wires | Cyber; crime and social engineering | cyber insurance: what it covers for a business, commercial crime insurance: what it covers and what it excludes |
| You make, import or sell a product | Products liability; recall | product liability insurance for makers, sellers and importers |
| You hire subcontractors | Certificates, additional insured wording, contractual liability | managing subcontractor insurance and certificates |
| You serve or sell alcohol | Liquor liability | liquor liability insurance and dram shop laws |
| You carry tools or goods between locations | Inland marine; cargo | inland marine insurance for tools, equipment and goods in transit |
| You have a board, investors or lenders on the cap table | D&O; management liability | Directors and officers (D&O) insurance explained |
| You run the business from home | Home-based business coverage or a BOP | home-based business insurance: why a homeowners policy falls short |
| Your business turns on one or two people | Key person life and disability; buy-sell funding | key person insurance: protecting the business from a loss of talent |
| Your assets or contract limits exceed your liability limit | Umbrella or excess | commercial umbrella insurance |
Two of these rows get skipped more often than they should. Crime and cyber are the obvious ones: the FBI's Internet Crime Complaint Center reported $3.05 billion in business email compromise losses in its 2025 report (IC3 2025 Internet Crime Report), and business email compromise typically means a payment redirected to an impostor's account, a loss a general liability policy does not address. The other is the employee-injury or discrimination claim from a part-time worker, which is why "we only have two people" is not the end of the analysis.
Three hypothetical businesses
These are examples we made up to show how the tiers shift. They are not recommendations for any real company.
| Business | Likely first-tier items | Likely contract or lender items | Situational items |
|---|---|---|---|
| Solo consultant working from a spare bedroom | Usually nothing by statute with no employees (state-dependent); state minimums for any vehicle used for the business | Professional liability and general liability if clients require them | Cyber; a home-business endorsement or BOP; key person disability |
| Four-chair salon with two employees and two booth renters | Workers' comp for employees; state rules on booth renters vary | General liability and property under the lease | Professional liability; cyber for client cards and bookings; EPLI |
| 12-employee HVAC contractor with three vans | Workers' comp; commercial auto at state minimums or higher | General liability with completed operations; additional insured and primary wording for general contractors | Tools and equipment; contractors pollution; umbrella if contracts require it; EPLI |
Notice that the same coverage can sit in different tiers for different companies. A solo consultant may need professional liability because one client's contract says so, while an HVAC firm needs liability limits above $1 million because its general contractors do. That is why a copied list from another business is a poor shortcut.
Putting the list in order when money is tight
If premium dollars are limited, work from the top:
- Tier 1 items, because they are not optional and the penalties for skipping them can exceed the premium.
- Tier 2 items, because they keep leases, contracts and loans alive.
- Coverage for the single largest loss you could not absorb, even if it carries a high deductible.
- Everything else, added as cash flow allows, with a calendar reminder to revisit it.
how to budget for business insurance explains how to plan the spend, and BOP vs general liability: which one do you need? shows when a bundled policy saves money over buying separately.
Keep the list current
The list you build today fits the business you have today. Add a location, a vehicle, a first employee, an online store, a government contract, or a new service line, and it changes. Revisit it at each renewal with the process in the annual business insurance review: what to update, and whenever you sign a contract with an insurance clause.
Bring a broker the written inventory, the contracts and the list above. A licensed agent or broker in your state can confirm which tiers apply to you, because coverage rules, forms and requirements differ by state and by carrier.
Key takeaways
- Start from what you own, who you serve and what could end the business, not from a product name.
- Sort coverage into four tiers: required by law, required by contract or lender, a loss you could not absorb, and situational.
- Most businesses need general liability and property coverage; add workers' comp as soon as there are employees, and auto, professional, cyber or crime coverage as the exposure appears.
- A contract's insurance clause can set your limits before any law does, so read it before you sign.
- Review the list at every renewal and whenever the business changes.