Insurance 101 · Module 2
Core Coverages
The foundational policies almost every business carries.
← All Insurance 101 guidesGeneral Liability Insurance
General Liability Insurance covers third-party claims that your business caused bodily injury, property damage, or personal and advertising injury such as slander or libel — paying legal defense costs, settlements, and judgments up to your policy limits. It's usually the first policy a small business buys.
Who needs it
Any business that interacts with customers or the public
Businesses that operate from a physical location
Companies whose employees visit client sites
Contractors and service providers
Retailers and restaurant owners
Consultants and professional service providers
What's covered
Bodily Injury: Medical expenses, legal fees, and settlements if someone is injured on your premises or by your operations. For example, a customer slips on a wet floor in your store.
Property Damage: Costs to repair or replace property you damage while doing business. For example, a contractor accidentally damages a client's hardwood floors.
Personal & Advertising Injury: Protection against claims of libel, slander, copyright infringement in advertising, or invasion of privacy.
Medical Payments: Immediate medical expenses for injuries on your premises, regardless of fault. Helps prevent small injuries from becoming lawsuits.
Legal Defense Costs: Attorney fees, court costs, and settlements, even if the lawsuit is groundless. Defense costs are typically covered in addition to your policy limits.
What's not covered
Professional errors or mistakes (covered by Professional Liability)
Employee injuries (covered by Workers' Compensation)
Damage to your own property (covered by Commercial Property)
Auto accidents (covered by Commercial Auto)
Intentional acts or criminal behavior
Contractual liability you specifically assumed
Commercial Property Insurance
Commercial Property Insurance pays to repair or replace your business's physical assets — building, equipment, inventory, and furniture — when they're damaged or lost to fire, theft, vandalism, or certain natural disasters, so you can get back to business.
Who needs it
Businesses that own or lease physical space
Retailers with inventory
Restaurants with kitchen equipment
Manufacturers with machinery
Offices with computers and furniture
Any business with valuable physical assets
What's covered
Building Coverage: The structure itself if you own it, including permanently installed fixtures like HVAC systems, plumbing, and electrical.
Business Personal Property: Equipment, inventory, furniture, computers, and other items your business owns.
Tenant Improvements: Upgrades you've made to a leased space, like built-in shelving or custom lighting.
Business Income/Interruption: Lost income and ongoing expenses if you can't operate due to covered property damage.
Equipment Breakdown: Mechanical or electrical failure of equipment (often an add-on or separate policy).
What's not covered
Flood damage (requires separate flood insurance)
Earthquake damage (requires separate earthquake insurance)
Normal wear and tear
Employee theft (covered by Crime insurance)
Vehicles (covered by Commercial Auto)
Damage from poor maintenance
Business Owner's Policy (BOP)
A Business Owner's Policy (BOP) bundles General Liability and Commercial Property coverage into one package — usually cheaper than buying them separately, and often including Business Interruption coverage. It's the simplest way for most small and mid-sized businesses to get well-rounded protection.
Who needs it
Small to medium-sized businesses
Retail stores and boutiques
Restaurants and cafes
Professional offices
Service businesses with a physical location
Businesses looking to simplify their insurance
What's covered
General Liability: Protection against third-party bodily injury, property damage, and personal/advertising injury claims.
Commercial Property: Coverage for your building (if owned), equipment, inventory, furniture, and other business property.
Business Interruption: Lost income and ongoing expenses if a covered event forces you to temporarily close.
Additional Coverages: Many BOPs include extras like data breach coverage, hired/non-owned auto, and equipment breakdown.
What's not covered
Professional liability/errors & omissions
Workers' compensation
Commercial auto
Employment practices liability
Flood and earthquake (unless added)
High-risk businesses may not qualify for a BOP
Workers' Compensation Insurance
Workers' Compensation Insurance pays an employee's medical bills, rehabilitation, and a portion of lost wages when they're injured or made ill by their job — and in exchange, employees generally give up the right to sue their employer over it. Most states require it for any business with employees.
Who needs it
Any business with W-2 employees (required in most states)
Construction and contracting companies
Manufacturing and warehouse operations
Restaurants and retail stores
Healthcare facilities
Even businesses with just one employee in many states
What's covered
Medical Expenses: Doctor visits, hospital stays, surgeries, medications, and physical therapy for work-related injuries and illnesses.
Lost Wages: Typically 2/3 of the employee's regular wages while they recover and cannot work.
Rehabilitation: Physical therapy, vocational training, and other services to help injured workers return to work.
Disability Benefits: Ongoing payments for employees who suffer permanent partial or total disability.
Death Benefits: Payments to dependents if an employee dies from a work-related injury or illness.
Employer Liability: Protection if an employee sues you for a workplace injury outside the workers' comp system.
What's not covered
Injuries from employee intoxication or drug use
Self-inflicted injuries
Injuries during commute to/from work (usually)
Injuries while violating company policy
Independent contractors (they need their own coverage)
Injuries from fights the employee started
Commercial Auto Insurance
Commercial Auto Insurance covers vehicles used for business — whether owned by the company or personal vehicles driven for work — against accidents, theft, and liability. Personal auto policies typically exclude business use, so if you or your employees drive for work, you need it.
Who needs it
Businesses that own vehicles (cars, trucks, vans)
Delivery services and couriers
Contractors who drive to job sites
Sales teams that visit clients
Any employee who drives for work purposes
Rideshare and transportation companies
What's covered
Liability Coverage: Bodily injury and property damage you cause to others in an accident while driving for business.
Collision Coverage: Damage to your vehicle from collisions with other vehicles or objects.
Comprehensive Coverage: Damage from theft, vandalism, weather, fire, and other non-collision events.
Medical Payments: Medical expenses for you and passengers injured in an accident, regardless of fault.
Uninsured/Underinsured Motorist: Protection if you're hit by a driver without adequate insurance.
Hired & Non-Owned Auto: Coverage for rental cars and employee personal vehicles used for business.
What's not covered
Personal use of vehicles
Vehicles used for racing or illegal activities
Normal wear and tear and mechanical breakdowns
Personal belongings inside the vehicle
Intentional damage
Vehicles not listed on the policy
Key takeaways
General liability is the foundation almost every business starts with
A BOP bundles general liability and property, usually at a lower combined cost
Workers' comp is legally required in most states once you have employees
Commercial auto is needed whenever vehicles are used for business