Running a small business involves a variety of risks—from property damage to lawsuits and employee injuries. A single lawsuit, fire, or unexpected medical claim can be financially devastating. That’s why having the right insurance coverage isn’t just smart—it’s essential. The right policies help protect your assets, minimize losses, and keep your business running smoothly.
With so many types of insurance available, it’s important to understand what each one covers and to choose the coverage that best fits your needs. Being properly insured ensures you’re protected when it matters most.
General Commercial Liability Insurance
General Commercial Liability Insurance protects your business against claims of bodily injury, property damage, or personal and advertising injury—such as defamation or copyright infringement—suffered by third parties during your business operations. It typically covers legal fees, medical expenses, and settlements if someone is injured on your premises or if your business causes damage to someone else’s property.
Example: A customer slips and falls in your facility, breaking their arm. General liability insurance would cover their medical expenses as well as your legal fees if they decide to sue.
Professional Liability Insurance (Errors & Omissions Insurance)
Professional Liability Insurance protects your business from claims that your professional services or advice caused a client financial harm due to errors, omissions, or negligence. It covers legal defense costs, settlements, and judgments related to lawsuits over professional mistakes.
Example: An accountant makes a calculation error that leads to a client’s financial loss. Professional liability insurance covers the resulting claim.
Commercial Property Insurance
Commercial Property Insurance protects your business’s physical assets—such as buildings, sheds, equipment, and inventory—against loss or damage from events like fire, theft, or natural disasters. It pays for repair or replacement of damaged property.
Example: Lightning strikes your storage barn, destroying forklifts and GPS equipment. This policy helps with repairs and replacements.
Inland Marine Insurance
Inland Marine Insurance covers equipment and tools in transit or stored off-site. It is essential for mobile crews in the field. This type of insurance protects tools used at various job sites, off-road logging equipment, and transported gear not covered by standard property insurance.
Example: A log loader is stolen while parked overnight near a remote site. Inland marine insurance covers the replacement cost.
Workers’ Compensation Insurance
Workers’ Compensation Insurance provides no-fault coverage for employees who are injured or become ill due to work-related activities. It covers medical expenses, lost wages, rehabilitation costs, and death benefits to dependents. It is required in most states for businesses with a certain number of employees. Employees typically cannot sue their employer for additional damages if they accept workers’ compensation benefits.
Example: An employee strains their back lifting heavy boxes. Workers’ compensation covers their treatment and a portion of their salary during recovery.
Employers Liability Insurance
Employers Liability Insurance covers an employer’s legal costs if an employee sues for damages not covered by workers’ compensation. It includes legal defense expenses, settlements, and judgments. Common claims include third-party-over actions (where an employee sues a third party who then sues the employer), loss of consortium, and dual capacity claims (where the employee alleges both a workers’ compensation claim and a separate lawsuit, such as for a defective product made by the employer).
Example: An injured employee sues the employer for unsafe working conditions, claiming gross negligence.
Commercial Auto Insurance
Commercial Auto Insurance covers vehicles owned or used by your business for work purposes, whether it’s a single car or a fleet of trucks used for hauling freight. It protects against accidents, theft, and damage. It includes liability for injuries and property damage, as well as coverage for vehicle repairs or replacement. Cargo coverage can be added.
Example: A driver hits black ice, flipping the logging truck and damaging thousands of dollars in timber. This policy covers the vehicle, cargo, and liability for roadway damage..
Motor Truck Cargo Coverage
Motor Truck Cargo Coverage protects the freight or cargo being transported in your trucks against damage or loss. This includes incidents such as theft, fire, collision, or load spills caused by a vehicle overturning.
Example: While running a delivery, logs fall from a flatbed trailer, damaging nearby vehicles. Cargo insurance helps cover the claim and replace the lost load.
Environmental Liability Insurance
Environmental Liability Insurance covers cleanup and legal costs related to accidental pollution—especially important when transporting fuel, oil, or chemicals. It includes coverage for fuel spills during transit, contamination from logging operations, regulatory fines, and remediation expenses.
Example: A hydraulic fluid leak contaminates a creek while you're operating near protected land. This policy helps handle the legal and environmental fallout.
Cyber Liability Insurance
Cyber Liability Insurance protects against losses from data breaches, cyberattacks, and other technology-related risks. It covers costs such as customer notification, credit monitoring, legal fees, and data recovery.
Example: Hackers steal customer data from your website. Cyber insurance covers the costs to notify affected customers, restore your system, and defend against lawsuits.
Business Interruption Insurance
Business Interruption Insurance reimburses lost income and operating expenses if your business is temporarily unable to operate due to a covered event (like fire or storm). It pays for lost revenue, rent, payroll, temporary relocation costs, and other expenses during the interruption period.
Example: A flood forces you to close your office for three weeks. Business interruption insurance helps cover your lost income during that time.
Choosing the Right Coverage
When deciding what insurance you need, start by assessing your risks. Consider your industry, assets, workforce, and how you interact with customers to identify the most relevant exposures. Determine which types of coverage—such as workers’ compensation or commercial auto—are legally required in the jurisdictions where you operate. Finally, review your insurance regularly to ensure it reflects changes in your business, such as expansions or acquisitions, so you remain adequately protected.
If you ever need insurance advice, contact an insurance agent. If you ever need legal advice about what coverages are required and what they protect, contact us. And if you are ever sued and need coverage advice or legal representation, contact us. Insurance safeguards your business’s future and gives you the peace of mind to focus on running and growing your company.
If you have questions about this article, or about business insurance in general, contact Mitchell Goldstein (mgoldstein@setlifflaw.com) at (804) 377-1269 or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.
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