Step 1 — What the law requires
Workers' compensation is mandatory in nearly every state once you have employees; thresholds and officer-exclusion rules vary by state. Commercial auto liability is mandatory for vehicles titled to the business. Some professions (contractors, home care agencies, staffing firms) must show proof of coverage and a surety bond to hold a license.
Step 2 — What your contracts require
Read the insurance exhibit of every client contract, lease, and vendor agreement before you buy. The common requirement set is $1M/$2M general liability, $1M auto, statutory workers' comp with $1M employers liability, and additional insured plus waiver of subrogation endorsements. Professional liability, abuse & molestation, and cyber appear in more contracts every year.
Step 3 — What would actually put you out of business
After legal and contractual minimums, insure the events you could not absorb:
| If this is true of your business | You likely need |
|---|---|
| You have employees | Workers' compensation, employment practices liability |
| You own equipment, inventory or tenant improvements | Commercial property / BOP |
| A shutdown would stop revenue | Business income & extra expense |
| You give advice or professional services | Professional liability (E&O) |
| You hold customer or patient data | Cyber liability |
| Employees drive their own cars for work | Hired & non-owned auto |
| Contracts require limits above $1M | Commercial umbrella |
| Staff work unsupervised in homes or with minors | Abuse & molestation coverage |
| You handle client funds | Crime / employee dishonesty bond |
What most owners over-buy and under-buy
Under-bought: business income, umbrella limits, and cyber. Over-bought: high property limits on cheap contents while carrying a $1M umbrella on a contract that requires $5M. The fix is not more policies — it is matching limits to your actual contracts and balance sheet.
Frequently asked questions
What is the minimum insurance a small business needs?
For most: general liability, workers' compensation if you have employees, and commercial auto if the business owns vehicles. Everything else is driven by contracts and your specific exposures.
Can I bundle everything into one policy?
Partly. A business owner's policy combines liability and property. Workers' comp and commercial auto stay separate, though they can be with the same carrier and billed together.
How do I know if my limits are high enough?
Compare them line by line against your largest contract's insurance exhibit and against your worst realistic loss. A broker review takes about 20 minutes and is free.