Business insurance protects businesses from operational losses, such as those arising from property damage, legal liability and employee-related risks. The types of losses covered depend on the insurance company, policy wording and local limitations.
There are several types of business insurance. Some common coverage types are general liability insurance, product liability insurance and property insurance.
General liability insurance covers the business for legal expenses in the case of claims or lawsuits arising from injuries, accidents or negligence. Product liability insurance covers claims that arise from defective products or services that cause injury or harm. Property insurance covers damage or loss to company property due to insured accidental events, such as fire, theft, hail and smoke.
Some types of business insurance are compulsory. For example, most states require worker's compensation insurance, unemployment insurance and state disability insurance. In addition, some states require insurance for specific business activities.