Business insurance for small businesses: what you need and what it costs
Edited by Moe Ameen · Published
Most small businesses start with general liability insurance, often bought inside a business owner's policy (BOP) that adds property coverage. Workers' comp is required by law in most states once you have employees, and most states require liability coverage on business vehicles. Insureon's 2026 data puts the median premium at $45 a month for general liability and $83 for a BOP. Leases, loans and client contracts often add requirements of their own.
Key takeaways
- General liability pays for injuries and property damage your business causes other people. Most small businesses start there.
- A BOP bundles general liability, commercial property and business interruption. Workers' comp and commercial auto are separate.
- Each state sets its own workers' comp rule: California requires it at one employee, Florida at four outside construction, and Texas makes it optional.
- A lease, loan or client contract can require coverage the law doesn't.
- Insureon's median premiums run from $45 a month for general liability to $245 for commercial auto.
What types of business insurance are there?
The main ones are general liability, professional liability, commercial property, workers' comp, commercial auto and cyber. A BOP packages several together.
| Policy | What it pays for | Who tends to need it |
|---|---|---|
| General liability | Bodily injury, property damage, medical expenses, libel, slander and the cost of defending a lawsuit [1] | All businesses; landlords and contractors may ask for it [4] |
| Professional liability (errors and omissions, or E&O) | Claims of malpractice, errors and negligence [1] | Businesses that provide services for a fee [4] |
| Commercial property | Loss of or damage to company property from fire, storms, vandalism and similar events [1] | Businesses with owned or rented space, or a lot of equipment or inventory [4] |
| Business owner's policy (BOP) | General liability, commercial property and business interruption in one policy [5] | Generally businesses with fewer than 100 employees or under $5 million in revenue [5] |
| Workers' compensation | An employee hurt on the job [4] | Businesses with employees; required by law in most states [4] |
| Commercial auto | An accident while working or in a company vehicle [4] | Businesses that use vehicles; may be required by law [4] |
| Cyber | Fallout from a cyberattack, such as identity theft, business interruption, reputational damage and data repair [12] | A separate policy: most property and general liability policies don't cover cyber risks [12] |
What does a business owner's policy cover?
A BOP bundles general liability, commercial property and business interruption insurance. You buy workers' comp and commercial auto on their own.
NerdWallet describes a BOP as those three coverages in one package, and says businesses generally need fewer than 100 employees or less than $5 million in annual revenue to get one [5]. It also says you'll have to buy commercial auto and workers' comp separately if you have vehicles or employees [5]. The SBA says bundling can make buying simpler and save money, and calls a BOP especially useful for home-based business owners [1].
Which business insurance is required by law?
Workers' comp in most states once you hire, and auto liability in most states for business vehicles. Each state sets its own rules and amounts.
NerdWallet lists workers' comp as required by law in most states, and commercial auto and professional liability as coverage that may be required by law or industry regulation [4]. Insureon says most states require auto liability coverage on business vehicles, with each state setting the type and amount [3]. The SBA also lists unemployment and disability insurance for businesses with employees, and says some states require more [1].
When do you need workers' comp insurance?
It's a state-by-state rule. In California one employee is enough; Florida starts at four outside construction; Texas lets most private employers skip it.
| State | When coverage is required |
|---|---|
| California | With even one employee. Roofers without employees must carry it too [9] |
| Florida | Four or more employees outside construction; one or more in construction; six regular workers, or 12 seasonal workers employed more than 30 days in a season, in agriculture. Owners who are corporate officers or LLC members count [10] |
| Texas | Optional for most private employers. Those without it must tell the state, and report injuries that cost more than one day of work [11] |
We only read these three states. Rules elsewhere differ, so go to your own state's workers' comp agency rather than assuming it matches one of them.
Who else can require you to carry business insurance?
Landlords, lenders and clients. A lease, loan agreement or contract can require coverage the law doesn't, sometimes naming the policies it expects.
- Landlords: NerdWallet says many require proof of insurance before they rent you space, and should spell out what it needs to cover [7]. General liability and commercial property are the usual asks [7].
- Lenders: a real estate lender might require property insurance [6]. For what else lenders look at, see business loan requirements.
- Clients and contractors: they often ask for a certificate of insurance, and a business partner may check for workers' comp before signing a contract with you [8].
A certificate of insurance lists your insurer, policy numbers, effective dates, limits and any additional insureds, and NerdWallet says it should be free [8]. Read the insurance clause in a lease or contract before you buy, so the policy matches what it asks for.
How much does small business insurance cost?
Insureon's medians run from $45 a month for general liability to $245 for commercial auto. Your industry, location and coverage limits move the price.
| Policy | Median per month | Per year |
|---|---|---|
| General liability | $45 | $538 |
| Business owner's policy (BOP) | $83 | $990 |
| Workers' compensation | $54 | Not published |
| Commercial umbrella | $86 | Not published |
| Professional liability / E&O | $88 | Not published |
| Commercial property | $108 | Not published |
| Cyber | $129 | Not published |
| Commercial auto | $245 | Under $375 to over $16,000 [3] |
Insureon says the figures are medians of policies bought by about 100,000 of its customers, which keeps very high and very low premiums from skewing them [2]. Its customers are small: 57% have one employee and 53% earn under $100,000 a year [2]. It names business size, location and type of work as the main things that set a price [2]. Most of its general liability customers pick a $1 million per-occurrence limit with a $2 million aggregate [2].
Does business insurance cost more in some industries?
Yes. In Insureon's data, construction firms pay a median $254 a month for workers' comp, while technology firms pay $34.
| Industry | General liability | BOP | Workers' comp |
|---|---|---|---|
| Consulting | $29 | $42 | $40 |
| Technology | $30 | $46 | $34 |
| Cleaning | $48 | $76 | $136 |
| Landscaping | $51 | $94 | $169 |
| Food and beverage | $44 | $148 | $106 |
| Construction | $82 | $98 | $254 |
Glisten check
One small business, three states: what's required and what it might cost
Take a consulting firm with three people on payroll, owners included, and no company vehicles. We applied each state's own rule to it and added Insureon's consulting medians.
| California | Florida | Texas | |
|---|---|---|---|
| Workers' comp required by the state? | Yes, from one employee [9] | No, until a fourth person, owners who are officers or LLC members included [10] | No. If it opts out, it must tell the state [11] |
| Lease or client contract | May still require general liability or property cover [7][8] | May still require general liability or property cover [7][8] | May still require general liability or property cover [7][8] |
| Median monthly premium, BOP | $42 [2] | $42 [2] | $42 [2] |
| Median monthly premium, workers' comp | $40 [2] | $40 [2] | $40 [2] |
Hire one more person in Florida and the answer changes. Insureon's medians are national, so a real quote in any of the three states can come in higher or lower.
Is this right for you?
Best for
- Owners setting up a business who want to know which coverage the law requires and which is a choice.
- Anyone reading the insurance clause in a lease, loan agreement or client contract.
Not ideal for
- Picking an insurer or comparing quotes. We don't rank insurers or sell insurance.
- A final answer on workers' comp outside California, Florida and Texas. Check your own state's agency.
Frequently asked questions
Is general liability insurance required by law?
NerdWallet lists it as coverage all businesses need and says a landlord or contractor may require it. The coverage it lists as required by law in most states is workers' comp [4].
Does an LLC need business insurance?
NerdWallet says LLC owners should carry it to protect the business's assets and to meet contracts and laws [13]. More on the structure itself in sole proprietor vs LLC.
Does a business owner's policy include workers' comp?
No. NerdWallet says you buy workers' comp and commercial auto separately [5].
Do I need workers' comp with only one or two employees?
In California, yes [9]. In Florida, not outside construction until four, counting owners who are officers or LLC members [10]. In Texas it's optional for most private employers [11].
Does general liability cover a data breach?
Usually not. The NAIC says most commercial property and general liability policies don't cover cyber risks [12].
How much does a certificate of insurance cost?
NerdWallet says it should be free once you have a policy [8].
How we know this
On November 2, 2026 we read the SBA's business insurance guide, Insureon's two cost pages (updated February 6 and March 4, 2026), six NerdWallet business insurance guides, the NAIC's cybersecurity page, and the workers' comp rules on California's, Florida's and Texas's own agency pages. Every cost is Insureon's median for its own customers. Bankrate's business insurance pages didn't load when we checked, so we cite none. The three-state example is our own reading of those rules.
- Get business insurance, SBA. Checked November 2, 2026.
- Small business insurance costs, Insureon. Checked November 2, 2026.
- Commercial auto insurance cost, Insureon. Checked November 2, 2026.
- Commercial insurance: what you need, NerdWallet. Checked November 2, 2026.
- Business owner's policy (BOP): what it covers, NerdWallet. Checked November 2, 2026.
- Business property insurance for small businesses, NerdWallet. Checked November 2, 2026.
- Business renters insurance: what it covers, who needs it, NerdWallet. Checked November 2, 2026.
- Certificate of liability insurance: what it is, how to get one, NerdWallet. Checked November 2, 2026.
- Employer information: workers' compensation, California Department of Industrial Relations. Checked November 2, 2026.
- Workers' compensation coverage requirements, Florida Department of Financial Services. Checked November 2, 2026.
- Employer resources: workers' compensation, Texas Department of Insurance, Division of Workers' Compensation. Checked November 2, 2026.
- Cybersecurity, NAIC. Checked November 2, 2026.
- LLC insurance: what coverage you need, NerdWallet. Checked November 2, 2026.