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What Is Business Insurance? – Part 1

By December 22, 2025Business Insurance

Trusted Choice® Business Insurance FAQ

What Is Business Insurance and Why Do I Need It?

Business insurance is a category of insurance policies that specifically protects a company, large or small, from financial loss. Business insurance can include everything from liability and property insurance to business interruption and cybercrime insurance. The business insurance protection that you need is as individual as your company is.

The type of coverage you should purchase and the amount of risk your policies should insure are determined by several factors: the size of your company, the number of people you employ, the type of business you’re in, and the value of your property and assets.

To fully cover all your financial risks, you may need to purchase several individual policies from different insurers. Your local Trusted Choice® Independent Insurance Agent works with a variety of insurance carriers and can help you put together an insurance program tailored to your needs.

What Does Business Insurance Cover?

Business insurance usually includes the basic types of coverage listed below. These policies will ensure the continuation of your business in the event of an expensive lawsuit, natural disaster, fire or theft. Without insurance, a major setback might spell the end of your business.

  • General liability insurance is designed to protect you and your business from many of the risks involved in running a business. These include claims for bodily injury and property damage on your premises, injury or damage from faulty products, and negligent actions from contractors you hire.

  • Property insurance protects against the financial loss and damage to your business property from fires, storms, theft, vandalism and other named causes.

  • Commercial vehicle insurance is coverage for your business’s vehicles and drivers for collision, liability, property damage, personal injury and damage to your vehicle.

  • Business income will provide your usual operating expenses if a natural disaster, fire or other event specified in the policy causes your business operation to be interrupted.

Other coverage you may need:

  • Product liability is designed specifically to cover your liability from faulty products that may cause damage, illness, injury or death.

  • Professional liability provides protection against the financial impact of negligent professional duty, wrongful acts, advice and services that lead to another’s loss or injury.

  • Errors and omissions is a type of professional liability insurance that covers a loss or injury suffered as a result of your failure to deliver on promised services.

  • Workers compensation covers employees who are injured or become ill on the job, and it’s required by law in most states.

  • Key person is a form of life insurance that pays a death or disability benefit if the owner or a key person in the company suddenly dies or is incapacitated.

  • Cybercrime covers risks to your business from a data breach or other internet-related crimes.

Which Business Insurance Policies Are Essential?

Operating a business creates many financial risks. While you can’t eliminate every one, you can protect your business through insurance. At the very least, make sure you have these essential types of coverage:

  • Commercial general liability

  • Commercial property

  • Business income

  • Commercial auto

  • Professional liability

  • Workers’ compensation

If you’re starting your own business, it may not occur to you how important it is to buy business insurance. But going without insurance can leave you open to costly lawsuits, expensive repairs or possibly even closure. Talk to your Trusted Choice agent about getting the coverage you need.

How Do I Buy Business Insurance?

The business insurance policy is a contract in which you agree to pay premiums to the insurance company, and that insurer agrees to reimburse your business for the financial loss caused by specific “perils” or risks that are named in the policy.

When your business incurs a financial loss because of a named peril, you file a claim with the insurance company — similar to making a claim on your personal auto or homeowners policy. You may be assigned an adjuster who assesses the damage and processes the claim.

If a claim is made against you by an injured party, such as a customer, your liability coverage is what protects you financially. If your company is named in a lawsuit, your liability policy will cover your legal expenses. Your insurance policy will specify the limits (maximum reimbursement) that you have selected for your liability coverage.

Your Trusted Choice agent can explain how business insurance works, the claims process and how you receive payment when a claim is approved.

What’s a Fair Price for Business Insurance?

It’s reassuring to know that a Trusted Choice agent is independent, meaning they can shop and compare policies sold by many different carriers to find the best coverage for competitive premiums. Keep in mind that protection and price will vary based on a number of risk factors, and no two businesses’ needs are the same.

Among the variables that can cause premiums to go up or down:

  • Location

  • Size

  • Type of business and risk exposure

  • Property and assets

  • Financial condition of your business

  • Previous claims or lawsuits

You can save money by combining various types of business insurance into one policy. These bundled policies are known as business owners policies (BOPs) and commercial package policies (CPPs).

What’s the Difference between a BOP and a CPP? Which Does My Business Need?

A business owners policy (BOP) combines the property and liability protections most small businesses need into one convenient package, and the price is less than what you’d pay for the coverages separately.

However, a BOP may not provide all the coverage you need. You’ll find more options with a commercial package policy (CPP). CPPs bundle business insurance like BOPs, but they let you pick which types of coverage to include in your package.

As a rule, BOPs don’t cover professional liability, commercial auto, workers’ compensation, or health and disability insurance, although some insurers will allow you to buy more coverage by adding what are called “endorsements” to your policy.

CPPs include property and liability coverage, but you can add many other types of insurance, including commercial auto, business income, employment practices liability, inland marine, cybercrime and professional liability. And some CPPs are specifically designed for different industries or professions.

Your Trusted Choice independent agent can explain the difference between these policies and tailor a BOP or CPP to meet your needs.

Is Business Insurance Required?

Certain types of business insurance are required by law in many states. Here are a few of the coverages you may have to purchase:

  • Workers’ compensation is required in most states if you have employees. Even if you run a family business, you’ll still be required to purchase workers’ compensation for the members of your family who work there.

  • Unemployment insurance must be paid by many businesses that have employees. Check with your state to see if you have to pay an unemployment insurance tax, or ask your Trusted Choice agent.

  • Professional liability insurance is required by some states. Your Trusted Choice agent can tell you if your state requires it for your profession.

  • Disability insurance covers employees who may be injured or become sick, and some states require employers to purchase it. Your Trusted Choice agent will know what you need.