In a perfect world, running a business would be all about growth. Getting more customers, opening new locations and hiring new employees. But maintaining the health of your business involves mitigating risks just as much as growing revenue. Accidents involving your customers, employees and property can create significant financial setbacks for your company.

That’s where business insurance comes in. It’s there to provide coverage for all aspects of your business. Did a fire break out in your warehouse? There’s insurance for that. Did a customer’s tile floor get cracked during that plumbing job? There’s insurance for that, too.

As a business owner, having insurance coverage means exchanging some monthly revenue for protection against a large lump sum expense down the line. But to get the right coverage, it helps to know what each kind of business insurance covers. This guide will explain what can be covered by business insurance and what each type of policy is meant for.

What can be covered under a business insurance policy

Customers and clients

Without customers or clients, you wouldn’t have much of a business. But with them also comes the risk of financial liability. There’s always the risk that a customer or client can file a lawsuit against your business. Certain types of business insurance help to mitigate this risk by providing claim investigation, defense and, where appropriate, coverage for situations and events involving customers:

  • If a customer slips and falls at your business property and needs medical attention, they could sue your company for medical care costs and lost wages. General liability insurance can help protect your business by covering the injured customers’ medical expenses, which may result in avoiding a personal injury lawsuit.
  • If your business involves on-site work at customer property and you or one of your employees accidentally damages or destroys some of the customer’s belongings, they could seek damages for the value of the property. This is another scenario where general liability insurance would step in, this time with third-party property damage coverage.
  • If you own a consulting business and a client claims that the work you delivered was substandard and led to their own monetary loss, they could sue you for professional negligence. Professional liability insurance provides defense and investigation for these claims, even if they’re false or frivolous, and protects you from the financial consequences of any legitimate claims.


As your business scales, bringing in more and more employees helps to keep all aspects of your company running smoothly. But just like customers, employees carry their own kinds of risks to your company’s bottom line.

  • If an employee is injured or becomes ill on the job as a result of their work, it’s up to you to compensate them for medical expenses and lost wages. Most states legally require you to have workers’ compensation insurance for this exact purpose. Workers’ comp can cover an employee’s medical costs for traumatic injuries or even cover long-term care costs, like physical therapy for chronic back injuries caused by their work. Disability insurance can offer similar coverage to employees who are unable to work due to an injury sustained outside the workplace.
  • Not every employee relationship is going to end amicably. If a current or former employee feels they were wrongfully terminated or discriminated against, they could end up filing a lawsuit against your business. Employment practices liability insurance (EPLI) covers your business against lawsuits and claims from current, former, or prospective employees.

Business Property

  • Natural disasters, water damage, theft, and vandalism are all real possibilities when you own or rent a property for your business. Your business premises are a sizable asset, and an unforeseen incident can create a financial setback that’s impossible to recover from. Commercial property insurance can help cover your business property, from the building’s exterior to all the assets contained within.
  • If your business involves performing work in multiple locations, such as a construction site or a client’s home or office, it’s very likely you bring along some equipment to help get the work done. When said equipment is lost, damaged or stolen (oftentimes during transit), it can create costly work delays and eat into your business’s capital to replace. Inland marine insurance exists to cover the cost of replacing your valuable equipment, even if it’s leased, rented, or borrowed.


If you live in the United States, chances are you already have auto liability insurance for your personal vehicle. After all, it’s required in almost every state. Commercial auto liability insurance is similar, except that it’s designed for vehicles you use for your business. It protects your business from financial liability in the event your company vehicle is involved in an accident.

Different types of business insurance

General liability insurance

If you’re starting a new business, general liability insurance is one of the first forms of coverage you should look into. It protects your business against personal injury and property damage claims made by third parties. Not having this essential coverage means a single slip, fall or accident can lead to a costly claim that can put your entire business in jeopardy.

Professional liability insurance

If you provide any form of professional service, there’s always the risk that a client will be unhappy with the results. They could claim your work caused them monetary damage or hurt their reputation in some way. Professional liability insurance provides defense and investigation for negligence claims you face arising from your professional services.

Inland marine insurance

Despite its name, inland marine insurance has less to do with nautical themes and more to do with protecting the equipment you use to run your business. From chainsaws to photography lenses, inland marine insurance covers your valuable equipment from theft, damage or loss, often while it is away from your premises. At Thimble, we call inland marine insurance Business Equipment Protection.

Workers’ compensation insurance

When one of your employees suffers a work-related injury or illness, they are faced with a multitude of financial blows. First comes the medical expenses, which can range from emergency room bills to prescription medicine costs. While they’re recovering, they incur even more expenses in the form of lost wages. Workers’ comp insurance helps protect your employees (and in turn, your business) by providing coverage for medical care, ongoing care and lost wages in the event of a workplace injury or illness. In most states, workers’ comp is required by law.

How business insurance works

Understanding business insurance is easy when you picture it as an agreement between two parties. The insurer agrees to provide financial coverage for the events specified in the insurance policy. The business owner agrees to pay the monthly premium to the insurer.

When an event covered by the insurance policy happens, the business owner (or a third party making a claim against the business) must file a claim with the insurance company. After the claim is filed, an adjuster reviews the situation to determine eligibility and how much compensation the business owner or third party is entitled to.

The bottom line

As a business owner, avoiding sudden and significant expenses is vital to maintaining a strong cash flow and keeping your business afloat. With business insurance, you receive protection from catastrophic financial setbacks in exchange for affordable monthly payments. If you’re a new business owner looking into insurance for the first time, general liability insurance coverage is a perfect way to start.

Some insurance companies require long-term coverage that’s unaffordable to new business owners. At Thimble, you can get general liability insurance coverage to fit your needs, whether it’s by the hour, day or month. Getting coverage is easy, too. All you need is your zip code, the industry you’re in and a few clicks and you can get a quote in as little as 60 seconds.