Business Insurance Overview: Liability, Property, Workers’ Comp & Auto Coverage

Learn the four basic parts of business insurance—liability, property, workers’ compensation, and commercial auto coverage. Protect your business, employees, and assets with our complete guide

Running a business comes with risks, and understanding how insurance works is critical to protecting your assets, employees, and operations. Whether you’re new to business ownership or have been running one for years without diving into your policy, this guide breaks down the four basic parts of business insurance and how they protect your business.

The Four Key Parts of Business Insurance

Business insurance generally consists of four major coverage areas:

1. Liability Coverage

2. Property Coverage

3. Workers’ Compensation Coverage

4. Commercial Auto Coverage

We’ll go through each type in detail so you can understand what’s included and why it matters.

Liability Coverage

Liability coverage protects your business from claims made by others for injuries, damages, or mistakes. Here are the main components:

General Liability

Covers injuries or damages to others caused by your business operations, like slip-and-fall accidents in your store. Common limits are $1 million per occurrence and $2 million per year. Note that General Liability does not cover employee injuries, product-related injuries, or professional advice.

Medical Expenses

Small and accessible coverage for injuries to business patrons, usually $5,000–$10,000. It helps resolve minor incidents quickly and prevents larger liability issues.

Products Liability

Covers injuries or sickness caused by your products or completed operations. Essential for manufacturers or food service providers.

Employment Practices Liability

Protects against lawsuits related to hiring, firing, or workplace behavior.

Employee Benefits Liability

Covers mistakes in providing employee benefits, like health or life insurance packages.

Cyber Liability

Protects against breaches of customer data, including social security numbers, credit cards, or other sensitive information.

Professional Liability

Covers errors, omissions, or bad advice provided by your business. Crucial for advisors, consultants, or anyone giving professional guidance.

Hired and Non-Owned Auto

Covers business-related use of vehicles not owned by your company.

Property Coverage

Property coverage protects your business’s physical assets, including buildings, equipment, and inventory.

Building Coverage

Covers damage to your owned or leased building. Essential if your lease requires you to insure the property.

Business Personal Property (BPP)

Covers office furniture, equipment, and other business-owned items. Payout can be based on Replacement Cost or Actual Cash Value (ACV). Replacement Cost is usually recommended.

Data Compromise

Covers losses from physical damage to hardware or software during a cyber attack. Often bundled with Cyber Liability.

Specialized Equipment (Inland Marine)

Protects high-value or specialized equipment that is hard to replace.

Money and Securities

Covers theft or loss of cash or financial instruments.

Business Income Coverage

Covers lost income due to a covered business shutdown.

Employee Dishonesty & Forgery/Alteration

Protects against theft or manipulation of business assets by employees.

Equipment Breakdown

Covers temporary or permanent replacement of malfunctioning equipment. Does not cover routine maintenance.

Workers’ Compensation Coverage

Workers’ Compensation protects employees who are injured on the job. Coverage limits are usually expressed in three numbers, e.g., $100,000/$500,000/$100,000:

• First: per injury limit

• Second: total claim limit for workplace sickness

• Third: per person limit for workplace sickness

Premiums are based on payroll estimates and employee risk classifications. Audits at the end of the policy term may result in adjustments.

Commercial Auto Coverage

Covers vehicles owned by your business. There are two main types:

Auto Liability

Covers damage and injuries caused by your business vehicles to others.

Physical Damage Coverage

Covers damage to your vehicles, including comprehensive and collision, with applicable deductibles.

Commercial auto insurance is highly state-specific, so consult your agent for local requirements.

Coverage Forms

To help organize your insurance, download two types of coverage forms:

1. Blank Form – Fill in your coverage details yourself.

2. Example Form – Pre-filled with sample coverage limits for comparison.

Having these forms in front of you while reviewing your policy makes understanding coverage much easier.

Summary

The four types of business coverage you need to know are:

• Liability Coverage – Protects against claims by others.

• Property Coverage – Protects your physical assets.

• Workers’ Compensation Coverage – Protects your employees.

• Commercial Auto Coverage – Protects your vehicles and others.

Additional Resources

• Worker’s Comp Audit Video – Learn how payroll audits work and avoid surprises.

• Scratch Entrepreneur Podcast – Hear from business owners about successes, failures, and lessons learned.

• Shine Insurance Website – Visit shineinsurance.com for more resources and support.