What kind of business insurance do I need?

The type of insurance you need is dependent on the type of risks that your business faces.

The most common kinds of insurance are:

1) General Liability - this specifically protects you in case you cause damage to someone else's property to to someone else's person. If someone visits your office and slips and falls, this is what protects you in case they sue. Also if a 3rd party gets hurt in the case of normal business activities via some freak accident. I can't think of any business that shouldn't get this type of coverage.

2) Property - this insures business property, including the business office. If you don't lease a space, but are working out of a coworking space, and 99% of your business assets are stored in the cloud (which is becoming more common) then you might not need this. Most businesses need this though.

--General Liability and Property Insurance are cheap relative to their coverage. If you fall into these categories, they are well worth the price.

3) Professional Liability - this insures against mistakes made in the line of business. This also called Errors and Omissions insurance. Some might disagree with me, but this insurance can be more costly to obtain than it is worth in some instances. For example, in the medical field, certain types of liability insurance can run into the 6 figures for yearly premiums. This is where you need to really assess how much professional risk you might incur. This is primarily for services, a product business generally doesn't need to worry about this.

4) Product Liability - this is in case you manufacture and sell a product. Like professional liability, policies differ quite a bit depending on the nature of your product.

5) Worker's Compensation - Up until the 1930s-ish anytime a worker got injured on the job they would sue their employer. This tied up the US court system quite a bit, and finally employers got together and used their clout to get the worker's comp laws passed. Basically, this insures you against a worker of yours getting injured on the job. In turn, the employee cannot sue you if they are injured on the job. Most states require this even if you have only one other full time employee other than yourself. If you are a one-person business is the only time you wouldn't have to get this. Like General Liability and Property Insurance, this is very cheap relative to coverage, and there's little reason to skimp on this.

Outside of these 5 there are a number of other smaller, more random insurances - such as business interruption insurance - which insures you if your business is closed due to factors outside of your control. Also cyberinsurance - insures you against damages from being hacked.

The general guideline with all insurance is that it's best to self-insure (meaning have a rainy day fund setup for problems that come up) if at all possible. Insurance is really meant against catastrophic situations that would immediately put your business under if they were to occur.