Types of business insurance policies

General liability insurance is a core component of business insurance. It protects you from lawsuits filed by people outside your company alleging that your business caused bodily injury, property damage or harm to a reputation. All businesses should have general liability insurance.

Risks it protects against: Lawsuits filed by people outside your company, like customers.

Costs it covers: In case of a lawsuit, legal defense and settlement costs, if any. In case of injuries on your property, medical bills.

Commercial property insurance pays out for damage or loss to physical property such as an office building or inventory because of things like fire or lightning. Some causes are usually excluded — for instance, damage caused by flood or water — but you may be able to add endorsements that extend your coverage if you face particular risks.

Risks it protects against: Damage to your building, inventory, equipment or other property caused by natural disasters or other covered accidents.

Costs it covers: Repairing or replacing your damaged property.

Business income insurance, also called business interruption insurance, financially protects you in the event of a covered disaster or situation that prevents you from operating your business. This insurance can reimburse you for lost business income, rent, payroll and taxes.

Risks it protects against: Loss of revenue when your business is forced to close, like in the weeks after a natural disaster.

Costs it covers: Lost business income. If extra expense coverage is included, it may also cover the cost of renting temporary space or hiring temporary staff.

Workers’ compensation insurance protects you from lawsuits or claims resulting from employee injuries that occur at work or as a result of the nature of their work. The coverage is required by law for most businesses, though workers’ comp requirements vary by state.

Risks it protects against: On-the-job injuries.

Costs it covers: The injured employee’s medical expenses, plus their income during the time they can’t work.

Cyber liability insurance is designed to protect you and your company if your digital data is compromised. This insurance — which is sometimes available as an add-on to a business owner’s policy or general liability insurance — typically covers your operational expenses as well as expenses incurred by customers whose online security was affected.

Risks it protects against: Data and other cybersecurity breaches.

Costs it covers: Varies depending on the policy. Cyber insurance can cover the cost of recovering your data, improving your digital security and even public relations expenses for restoring your company’s reputation.

Business umbrella insurance kicks in after you’ve maxed out your liability coverage for a particular incident. It’s a good idea for large businesses that could be sued for significant sums.

Risks it protects against: Large lawsuits in which settlements can’t be covered in full by general liability insurance.

Costs it covers: Settlement costs.

If you or another core employee dies or becomes unable to work, key person insurance can be used to pay for lost business income, hire a replacement or cover similar expenses related to the loss of an executive.

Risks it protects against: Operational difficulties if a key member of the business leadership dies or can no longer work.

Costs it covers: Varies depending on the policy. Key person insurance can make up for lost income, pay for finding and hiring a replacement or cover other related costs.

D&O insurance protects members of your board of directors and executive leadership team if they’re named in lawsuits against the company.

Risks it protects against: Lawsuits that threaten the personal finances of executives and board members.

Costs it covers: Reimburses directors and officers for legal settlement costs.

Once you know what types of business insurance you need, you can seek out providers or an insurance agent to help you.

If you need only general liability insurance, a business owner’s policy or other basic types of coverage: Get quotes from online business insurance companies. These providers can give you a cost estimate in minutes. You can often buy the insurance you need online, getting the protection your business needs right away.

If you need umbrella insurance, key person insurance or directors and officers insurance: These more specialized types of coverage tend to be more expensive. A business insurance agent near you can help you get multiple quotes and choose the provider that offers you the best coverage at the best price.