Starting A Business – What Insurance Do I Need?

Starting a business can be a dream come true for many.  One of the most important steps in starting a business is constructing a proper commercial insurance portfolio. Depending on the type and size of the business, the insurance coverage that you need can vary immensely, so it is important to sit down with your insurance advisor and go over the details of your business to ensure that your policies are set up properly.

The main form of commercial insurance that most businesses should start with is a Business Owner’s Policy, or BOP. A BOP, in its simplest form, provides coverage for business property and general liability. As stated above the limits and coverage amounts that you will need vary greatly from business to business, so it is a good idea to sit down with your insurance advisor and make sure that your coverage is sufficient for your specific business. If your business involves working on customer’s vehicles, you should make sure that your BOP includes Garage Keeper’s Liability coverage. This protects your business from damage to a customer’s vehicle while it is in your possession. Another addition to the BOP that may be necessary is Professional Liability, or Errors & Omissions (E&O). E&O insurance is essential for many businesses that give advice or perform a professional service. E&O covers losses that would not be covered under the general liability portion of your BOP. These types of losses range from negligence, to failure to deliver, and an E&O policy can save you big time, should a lawsuit ever arise.

Another key component of a properly constructed commercial insurance portfolio is a Commercial Auto insurance policy. If your business owns any vehicles, or you use your personal vehicle in your daily business activities, it is a good idea to have commercial auto coverage. A commercial auto policy will give you the coverage that you need to make sure that you will be protected from losses arising from activities related to the business. If your business does not own any vehicles, and you do not use your personal vehicle for business activities, you still may need commercial auto coverage. In most cases, you can add Hired/Non-Owned auto coverage to your BOP to make sure that losses arising from an employee or hired driver using their vehicle in a business activity, are covered properly. This insulates your business from costly payouts if a hired or non-owned vehicle is damaged when being used in a business capacity.

When constructing your commercial insurance portfolio, a very important, many times overlooked piece is a Commercial Umbrella policy. A Commercial Umbrella policy goes hand in hand with your BOP and Commercial Auto and offers additional “umbrella” of liability coverage should the liability limits on your underlying policies ever be exceeded.

Last, but not least, is Worker’s Compensation coverage. In most states businesses are required to carry Worker’s Compensation insurance, when they reach a certain number of employees, however it is important to carry Worker’s Compensation even when it is not required. Worker’s Compensation covers your employees if they are ever injured on the job. A properly constructed Worker’s Compensation policy will provide coverage for your employee’s medical expenses that the business is deemed liable for and give them coverage for lost wages arising from the injury. It is important when putting together your Worker’s Compensation policy that you have an accurate estimate of your total payroll. Worker’s Compensation policies are audited at the end of each term and having an accurate estimate of payroll will ensure that you do not have a large amount of additional premium owed at the end of the term.


Navigating the waters of starting a business and constructing your commercial insurance portfolio can be complicated, and costly if not done properly. Give us a call and allow Lighthouse to get started making sure that your business is properly protected.