Fine Print Guide

Guide

Starting a business

An LLC or corporation protects your personal assets in some cases, but it doesn't pay claims. Insurance does. Most small businesses start with liability coverage and add what their work needs.

At a glance

  1. Start with general liability, or a BOP Often required by someone else
  2. Add professional liability if you give advice or services Depends on state or visa
  3. Insure vehicles used for the business Depends on state or visa
  4. Consider cyber insurance Optional
  5. Check licenses and bonds Depends on state or visa

  1. 1 Start with general liability, or a BOP

    Often required by someone else

    Covers claims that your business injured someone or damaged property. If you have a location, equipment or stock, a business owner's policy bundles liability with property and lost-income coverage.

    Read more: General liability · Business owner's policy

  2. 2 Add professional liability if you give advice or services

    Depends on state or visa

    Consultants, designers, developers, accountants and other experts face claims that their work cost a client money. General liability doesn't cover that.

    Read more: Professional liability

  3. 3 Insure vehicles used for the business

    Depends on state or visa

    Vehicles the business owns, or uses heavily, usually need commercial auto; a personal policy may exclude some business use. If you or employees drive personal cars for work, hired and non-owned auto protects the business. The driver's own policy pays first.

    Read more: Commercial auto

  4. 4 Consider cyber insurance

    Optional

    If you hold customer data or take payments online, a breach can mean notification costs, lawsuits and downtime.

    Read more: Cyber insurance

  5. 5 Check licenses and bonds

    Depends on state or visa

    Some trades need a license, and some licenses require a surety bond or proof of insurance. Your state or city licensing office will say.

Things that often surprise people

  • A home policy covers very little business property and no business liability, even if you work from home.
  • Clients may ask for a certificate of insurance and to be named as an additional insured before you start work.
  • Professional, cyber and management policies are usually claims-made: the policy must be active when the claim arrives.