Module 06 of 07

Business insurance

Insurance is the financial backstop when your legal structure isn't enough. An LLC limits how far a lawsuit can reach into your personal finances — but it doesn't pay for the lawsuit itself, or for a flood that destroys your inventory, or for a worker injured on the job. Physical businesses have a wider range of exposures than most, and the right coverage stack reflects that.

The coverage types physical businesses need to know

Select a coverage type to see what it covers, what it doesn't, and what it typically costs.

General liability insurance
Covers claims that your business caused bodily injury or property damage to a third party. A customer slips on your floor, a product you sell injures someone, you accidentally damage a client's property while working in their home. It pays legal defense costs and settlements up to your policy limit. This is the most commonly required coverage — landlords and wholesale vendors often require it before doing business with you.
Typical cost: $400–$1,500/year. Higher for food service, trades, and higher-traffic retail.

In this Module

  • Coverage types

  • Coverage by business type

  • What insurance doesn't cover

  • Real-world example

Related Modules

  • Business structure

  • Workers’ comp & HR

What insurance doesn't cover (and people assume it does)

Your personal home and renter's insurance does not cover business equipment, even if you store it at home. Your camera, laptop, inventory, or tools used for business purposes are excluded. You need business property coverage for those.

Standard business property insurance does not cover floods. Flood coverage is a separate policy — important for ground-floor storefronts in flood-prone areas. Check FEMA's flood map for your location before assuming you don't need it.

General liability does not cover professional errors. If you're a contractor, consultant, or service provider and your work causes financial loss to a client, you need professional liability (E&O) coverage in addition to general liability.

Real-world example

Ramona had a gift shop with $40,000 in inventory. When a burst pipe flooded the back room, $18,000 in stock was destroyed. Her general liability policy covered third-party injury — not damage to her own property. She had no business property coverage because she assumed the landlord's insurance covered the contents. It didn't. The landlord's policy covers the building; tenant contents are the tenant's responsibility.

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