What is Business Insurance and What Types Do I Need?

Business insurance coverage protects businesses from losses due to unexpected events. Coverage is specific to the plan you have finalized with your insurance provider. However, common coverage includes protection over property damage, legal and employment practices liability, cyber protection, and employee-related risks.

To make it easier to understand what coverage your business may need, let’s break down the common coverages.

General liability coverage

General liability coverage is foundational protection for the basic risks of running a company. Incidents like employee injuries on-premises, or injuries or damages caused by your offering, and accusations of libel or slander all fall under general liability coverage. 

When you’ll need this: when you lease your office, work in a co-working space, or earn your first customer. 

Directors and officers coverage

Directors and officers coverage protects the personal assets of your founders, officers, and board members. It also protects your company from lawsuits associated with their decisions. Events like actual or alleged wrongful acts in managing your startup, omissions and misstatements in disclosures, and misuse of company assets are examples of directors and officers coverage. 

When you’ll need this: when your organization is financing or you create a board.

Errors and omissions

Errors and omissions coverage protects you if a mistake in your product causes a customer financial loss. Events like product failures, bugs, and outages; failure to meet contractual obligations; negligence and poor quality all fall under errors and omissions coverage.

When you’ll need this: when your organization conducts product testing, activates product launches, and manages product licensing. 

Cyber protection

Cyber protection coverage protects against the cost of data breaches caused by mistakes, hacking, and social engineering. Individual or class-action allegations of identity theft and coverage for your customer data and data stores on behalf of customers are examples of cyber protection. Cyber protection also covers the cost of forensic analysis, ransomware payments, customer notification, settlements, and credit monitoring. 

When you’ll need this: when your organization collects sensitive data or you have non-sensitive data at scale. 

Employment practices liability 

Employment practices liability coverage protects from actual and frivolous allegations of wrongdoing by and between managers and employees. This coverage protects against improper hiring practices; retaliation and wrongful termination; discrimination based on age, gender, race, and more; and harassment. 

When you’ll need this: when your organization is conducting their first round of hiring.