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When it comes to entrepreneurship and opening your own small business you have to work hard to see your dreams come true. But too many small businesses are risking losing it all because they don’t believe they will need any insurance to help protect them.

Small business owners should be considering four different types of insurance to ensure their business and assets are well covered and protected. These types of insurance include:

  • General Liability Insurance

Like it sounds, general liability insurance is the most general and basic form of insurance coverage any small business should carry. This coverage will protect you in claims resulting from accidents, injuries, medical expenses, slander, libel, and bodily injury.

  • Product Liability Insurance

Product liability insurance coverage is designed to protect you from financial loss if one of your products is to blame for the cause of injury or bodily harm to an employee or client.

  • Professional Liability Insurance

If your business provides services rather than products, you will want to consider professional liability insurance coverage. This coverage protects your business against claims for malpractice, errors and omissions, and negligence.

  • Commercial Property Insurance

Commercial property insurance is designed to protect you in cases of damage to your property. You can choose to have a general commercial property insurance coverage plan that will protect you in all areas of damage or a specific commercial property insurance coverage plan that will protect you for specified damages. Examples of claims for commercial property insurance include damages from wind, hail, hurricanes, vandalism, and civil disobedience.

So how important is it for your small business to have each of these types of insurance coverages? To answer this question it is important to consider the most common and the most expensive types of insurance claims that are made by or against small businesses. While it is impossible to predict what will happen in the future, it is possible to prepare for and protect yourself and your small business from these risks in advance.

In 2015, a research report was released showing the most common and the most costly claims for small businesses. According to this report, it is expected that 40% of all small businesses will experience some sort of claim within the next 10 years. And unfortunately sometimes all it takes is one small business risk without proper insurance coverage to occur to completely shut down your business.

The results are as follows:


Burglary and Theft Most common 20% of all claims
Water and Freezing Damage 15% of all claims
Wind and Hail Damage 15% of all claims
Fire 10% of all claims
Customer Slip and Fall 10% of all claims
Customer Injury and Damage Least common less than 5% of all claims
Product Liability Least common less than 5% of all claims
Struck by Object Least common less than 5% of all claims
Reputational Harm Least common less than 5% of all claims
Vehicle Accident Least common less than 5% of all claims



Reputational Harm Most costly averages $50,000 per claim
Vehicle Accident Averages $45,000 per claim
Fire Averages $35,000 per claim
Product Liability Averages $35,000 per claim
Customer Injury and Damage Averages $30,000 per claim
Wind and Hail Damage Averages $26,000 per claim
Customer Slip and Fall Averages $20,000 per claim
Water and Freezing Damage Averages $17,000 per claim
Struck by Object Averages $10,000 per claim
Burglary and Theft Least costly averages only $8,000 per claim

As you can tell from the tables, the most common small business claims tend to be on the lower end of the cost table, while the least common claims are amongst the most expensive claims. This means if a small business decides to only purchase minimal insurance coverage that will cover them in the most common types of claims, they are still putting themselves at risk of losing it all if a more costly claim they are not covered for comes against them.