Starting your own small business can be immensely rewarding. But for all the wonderful upsides—independence, growth, and autonomy, as well as the opportunity to monetize your skills and interests—there are inherent risks too.

It pays to ask: what types of insurance does a small business need? Protecting yourself before an incident occurs can make the difference between recovering gracefully from unexpected challenges and having to close the book on your entrepreneurial dreams.

Read on to learn more about eight kinds of insurance your small business may need.

1. General Liability Insurance

As the name suggests, General Liability insurance protects policyholders against broad risks like accidental bodily injury, property damage, and advertising injury to a third party. It’s an essential underlying coverage to have because every small business — no matter how carefully it operates — is vulnerable to the possibility of a lawsuit stemming from these types of injuries.

Let’s take a closer look at the types of injury covered under a General Liability insurance policy.

Bodily Injury and Medical Bills

Your company may be held liable for any injuries non-employees sustain on your property, like if a client trips on your uneven staircase or gets struck by a falling light fixture. You may also face liability for bodily injury you cause others on client property or in a public place — say someone trips over equipment your employee has left in a hallway.

The total cost for bodily injury can include medical and legal expenses. Without insurance, small businesses may find themselves on the hook for thousands of dollars following a single mishap. Having a General Liability insurance policy in place can also help companies avoid time-consuming, costly trials by covering medical payments without the need for litigation.

Property Damage

In addition to bodily injury, General Liability insurance covers property damage to third parties, making it especially important for small business owners who visit clients’ homes or commercial spaces. It is important to note that this coverage does not include damage to your own property (this is something that you would need property insurance for, as explained below).

Here’s just one scenario illustrating the need for this protection: A housekeeper employed by a cleaning company knocks over a houseplant in an antique vase, cracking the vessel. The client insists the company cover the cost of replacement.

Or say a painter leaves a window open to improve ventilation — but forgets to close it before leaving the job site for the evening. A rainstorm hits later that night, streaming through the open window and causing water damage to the hardwood floors.

Personal and Advertising Injury

The third type of coverage that falls under General Liability is advertising and personal injury. Examples include:

  • Libel and slander
  • Malicious prosecution
  • Wrongful eviction
  • Violation of privacy
  • Copyright infringement

If you wrongly accuse a competitor of trying to sabotage your business, they could sue you for malicious prosecution. If you roll out a new marketing campaign and a competitor alleges you stole their advertising ideas, this policy would insure you against subsequent legal costs.

Accidents can happen in the blink of an eye, and carrying General Liability insurance protects small businesses from having to pay out of pocket in the aftermath.

2. Professional Liability Insurance

Professional Liability insurance, also called errors and omissions insurance, protects small businesses against liability should their advice or services lead to financial damage for a client. It can be helpful to think of this coverage as a form of malpractice insurance specific to your line of work.

Professional Liability goes beyond General Liability to cover:

  • Professional negligence
  • Misrepresentation
  • Violation of good faith and fair dealing
  • Inaccurate advice

If you are self-employed as a consultant, or run a small consulting firm, your livelihood depends on making recommendations to clients based on your experience in the field. What if one of your proposals causes your client to lose money? They could sue you for that amount, claiming you provided faulty business advice. Without Professional Liability insurance, you may have to shoulder the legal fees and damages out of pocket.

Or let’s say you’re a wedding photographer and a client sues you after your memory card malfunctions after the ceremony — making the pictures you took irretrievable. Whatever the exact nature and risks of your profession, Professional Liability insurance protects against the financial consequences of making mistakes on the job.

3. Property Insurance

Chances are your small business has invested in some combination of commercial premises, equipment, and supplies. Property insurance protects the value of these assets in case they’re damaged or destroyed by a cause covered under your policy.

Imagine you own a local salon. Late one night you get the phone call every business owner fears: your business property has gone up in flames. Thankfully, nobody is hurt, but both the structure of your shop and its contents have been damaged by the fire and smoke. If you lack Property insurance, you’ll have to pay to repair the building and replace your damaged equipment on your own.

It’s still important to carry Commercial Property insurance even if you operate a home-based business. Why? Because Homeowner’s insurance only protects personal property up to a certain point, meaning it’s important to insure your work-related equipment separately. You’ll be glad you took out a commercial policy for your small landscaping company if someone breaks into your garage one day and steals your commercial grade lawncare equipment, for example.

4. Business Interruption Insurance

It’s only natural to focus on the cost of damaged equipment or premises in the wake of a disaster. But there’s another key cost to consider, too: The income you’re losing out on in the interim. Even if a disaster knocks your small business out of commission, recurring expenses — like utilities, payroll, rent/lease, etc.— will continue to pile up.

Business Interruption insurance can tide small businesses over until they’re operational again following a covered catastrophe. This type of policy can cover lost revenue, operating expenses, and costs associated with moving your business to a temporary location while you’re waiting for your usual commercial premises to become operational again.

5. Product Liability Insurance

Of course, you stand behind your company’s products and services. Even so, there’s a chance a product you manufacture or sell to customers could malfunction — and if it does, you could face a lawsuit.

Most General Liability policies provide a limit for products and completed operations. Say your catering company is in charge of preparing and serving hors d’oeuvres for a corporate networking event. Everything goes smoothly — until the next day, when multiple attendees have come down with food poisoning after eating your tuna tartare bites. In a case like this, your General Liability insurance can cover medical expenses for those affected — and legal expenses if anyone sues.

Product Liability, on the other hand, is a specialized type of coverage for businesses with heavy manufacturing operations, often producing dangerous or complex products such as medical devices or pharmaceutical drugs. Often, insurers will exclude the products and completed operations limit for these companies and make them get a separate Product Liability policy because the risks are much greater than those covered by a standard General Liability policy. If your company falls into this category, consider taking out a Product Liability policy in addition to your General Liability policy.

6. Worker’s Compensation

Here’s a good rule of thumb: if your small business has employees of any kind, it needs Workers’ Compensation coverage. Requirements vary by state, but it’s a good idea to protect your workforce to the fullest extent. This way, employees who become injured or ill on the job can receive compensation for short- and long-term costs such as:

  • Ambulance transportation
  • Medical bills
  • Physical therapy
  • Lost wages

Carrying a Workers’ Compensation policy is a win-win: Employees receive compensation for work-related injuries and illnesses while your small business avoids a potential lawsuit.

7. Commercial Auto Insurance

Many small businesses use one or more vehicles for work-related purposes, which means they need Commercial Auto insurance — both to protect the value of these vehicles and to cover potentially costly litigation following an accident.

Most Commercial Auto policies include some combination of the below coverage types. You can tailor your policy to meet your specific business needs.

Collision Coverage

This type of coverage kicks in if your vehicle is struck by another vehicle, or if your vehicle strikes an inanimate object or turns over.

Physical Damage Coverage

Also known as comprehensive coverage, this type of coverage offers financial protection against a range of risks from theft to weather-related damage.

Liability Coverage

If you or your employees cause bodily injury or property damage to a third party while driving your commercially insured vehicle, your policy will cover the damages.

Uninsured Motorist Coverage

In the event someone with no little-to-no auto insurance hits your car, your policy can kick in to cover those damages.

We all like to think of ourselves as good drivers, but the truth is that everyone takes on a certain amount of risk every time they get behind the wheel. Don’t expect your Personal Auto insurance policy to protect your work-related transportation; only a Commercial Auto insurance policy can do that.

8. Cyber Liability Insurance

Cyber Liability insurance is one of the newer types of small business insurance on the block. It’s meant to protect businesses against the effects of data breaches and cyberattacks.

For example, say you run a financial consulting business — which means you’re privy to sensitive client information. One day you discover a hacker has compromised your server and gained access to your stored files. Cyber Liability insurance can help de-escalate an already bad situation and cover costs associated with notifying affected clients, recovering lost data, and mitigating legal fees.

It may seem daunting at first to get a handle on all the types of insurance a small business needs these days. But navigating the aftermath of an accident or disaster without insurance tends to be far more difficult than getting the coverage you need up front.

Luckily, it’s more convenient than ever to shop around for Small Business insurance. Thimble even offers on-demand General Liability insurance that’s customizable to your company’s exact needs — so you can purchase $1 million in coverage (or more) for an hour, day, week, or month without even having to call an agent.