Having the right insurance can mean the difference between a minor setback and a financial disaster. Entrepreneurs may need several types of coverage, including general liability insurance, business interruption insurance, commercial property insurance, commercial auto insurance, and professional liability insurance. Each serves a different purpose, and many small businesses end up combining policies to fit their needs and budget.

Before moving into the different types of insurance policies, it is important to understand the type of layer of coverage that insurance policies may have. Plews Shadley Racher & Braun LLP describe the three types of layers of coverage:

First Layer: Primary Policy

• Provides initial layer of coverage.

• Primary policies provide different types of coverage (i.e. property, CGL, etc.).

• Deductible or self-insured retention (SIR).

• May provide for defense costs (liability).

Second + Layer(s): Excess Policy

• Provides coverage above primary policy and any lower excess policies.

• Underlying layers of coverage must be exhausted.

• Typically provide same coverage as primary policy, but with higher limits.

Top Layer: Umbrella Policy

• Designed to “fill in the gaps”.

• If no underlying primary coverage, then functions like a primary policy.

• If underlying coverage, then functions like an excess policy.

The following insurance policies are first-layer policies (or primary policies):

• General Liability Insurance

• Business Interruption Insurance

• Commercial Property Insurance

• Commercial Auto Insurance

• Professional Liability Insurance

General Liability Insurance (GLI) is one of the most important forms of protection a small business can have. It helps cover the cost of accidents, property damage, or customer injuries that happen as part of your normal operations. Without this coverage, even a single incident could lead to expenses that threaten your entire business.

Think of GLI as your business safety net — it protects you if someone gets hurt on your property, if your work accidentally damages a client’s property, or if you face a lawsuit over an accident. It can also help cover legal fees, settlements, or judgments.

Why It Matters: Real-World Scenarios

Nutrition or Supplement Business:
A small nutrition shop sells vitamins and protein powders. One day, a customer claims a supplement caused an allergic reaction and decides to sue. Even if the owner did nothing wrong, defending the business in court could cost thousands of dollars — and settlements can be much higher.

• Estimated GLI Cost: About $29/month (~$350 per year)

• Without GLI: The owner would have to pay legal fees, settlements, and medical expenses out of pocket.

Cleaning Business:
While cleaning a client’s office, an employee accidentally knocks over a computer tower, damaging both the equipment and stored data. The client demands compensation for the loss.

• Estimated GLI Cost: Around $44/month (~$525 per year)

• Without GLI: The owner would have to cover the repair costs and possibly the client’s lost income — potentially thousands of dollars.

Handyman Business
During a gutter repair, an employee falls from a ladder and injures their back, also damaging a customer’s fence. Even if workers’ compensation covers the medical expenses, the business is still responsible for property damage and any legal claims.

• Estimated GLI Cost: Around $67/month (~$809 per year)

• Without GLI: Medical bills and property damage could easily reach tens of thousands of dollars.

Affordable Options for Small Businesses

Many insurance companies offer Business Owner’s Policies (BOPs) — bundled packages that include General Liability Insurance plus other key coverage, like property insurance or business interruption protection, at a reduced cost.

If you’re just starting out, it’s worth comparing small business policies from providers like:

• Next Insurance – nextinsurance.com

• Hiscox – hiscox.com

• The Hartford – thehartford.com

Smart Tip

Before purchasing a policy, make sure it matches your business type and size. You don’t need the most expensive coverage — just enough to protect you from realistic risks based on what you do. Review your policy every year or when your business grows to ensure your coverage still fits your needs.

While General Liability Insurance is the foundation of most business protection plans, it’s not the only type you may need. Depending on what you do — whether you own property, drive for business, or provide professional services — additional insurance can help safeguard your income, assets, and reputation. Below are some common types of coverage small businesses often consider, along with typical monthly costs for the South Bend area.

(Costs may change depending on your area of operation).

1. Business Interruption Insurance

If a disaster such as a fire, flood, or major storm forces your business to close temporarily, this coverage replaces lost income and helps pay ongoing expenses like rent, payroll, and loan payments.
Example: If a bakery shuts down for two months after a kitchen fire, business interruption insurance can help cover rent and employee wages until the shop reopens.
Typical Cost: $40–$130 per month (standalone policy)

2. Commercial Property Insurance

This insurance protects your physical business assets — such as your building, inventory, tools, or equipment — against damage or loss caused by fire, theft, or vandalism.
Example: A small boutique could use this coverage to replace stolen merchandise or repair storm damage to its storefront.
Typical Cost: $60–$80 per month

3. Commercial Auto Insurance

If you or your employees use vehicles for business purposes — whether delivering goods, transporting clients, or making service calls — personal car insurance will not cover business-related accidents. Commercial auto insurance provides protection for vehicle damage, injuries, and related legal claims.
Typical Cost: About $135 per month per vehicle (varies by driving history and usage)

4. Professional Liability Insurance

Also called “Errors and Omissions Insurance,” this coverage protects service-based businesses if a client claims that your professional advice, service, or work caused them financial loss.
Example: A marketing consultant whose campaign did not perform as expected could be sued by a client — this policy helps cover legal fees or settlements.
Typical Cost: $45–$165 per month, depending on your field and risk level

Here are some examples of local Insurance Agencies in the South Bend-area

If you’re looking for local support or help finding the right policy, these agencies serve small businesses:

• Aldridge Insurance

• Gibson Insurance Agency

• Dodd Insurance Agency

• McCartney Insurance, LLC

And click here to view a list of some national (U.S.)-scale insurance carriers with different types of coverage for small businesses.

📝 List: National-scale insurance carriers.

Smart Tip

When comparing policies, ask your agent if you can bundle coverage — for example, combining General Liability and Property Insurance into a Business Owner’s Policy (BOP). Bundled plans often cost less and provide more complete protection for small business owners.

It is important for most businesses that you carry general liability insurance. It covers financial losses related to operating your business or selling your products that result from bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.

You can generally buy a policy through a commercial insurance agent in your local area. They kind of find available policies from different insurance companies that fit the needs of the type of business you have. Rates can vary, so you might shop around and get quotes from a couple of different insurance agents. They earn commissions paid by the insurance company. It is a good idea to ask people who have been in business for a while to recommend a commercial insurance agent.

Depending on your types of business and where you are located, a $5 million policy with good coverage will generally cost less than $1,000 per year, and sometimes less than $500. It is common for small businesses to carry coverage of $1 million per claim, with a $2 million limit for all claims during the year.

While general liability insurance is probably where you want to start, it may be a good idea to consider what is called a ‘business owners policy’, which combines general liability insurance with commercial property insurance and business interruption insurance (which replaces business income that is lost due to a disaster such as a fire). Additional insurance products are available, such as commercial auto insurance if you or your employees drive a work vehicle (your personal auto policy will not cover accidents that happen when you use your personal vehicle for business purposes), or product liability insurance (to cover injuries or damage caused because of a design defect or manufacturing defect). When you sell professional services, such as legal, medical, building contracting, accounting, consulting or counseling services, you can also buy what is called professional liability insurance (or errors and omissions insurance). It covers claims against you for such things as providing inaccurate advice, being negligent, violating good faith, or misrepresentation.

The U.S. Small Business Administration provides a helpful chart with various types of insurance you can purchase in addition to insurance covered by law: https://www.sba.gov/business-guide/launch-your-business/get-business-insurance

When deciding on insurance, you should consider what it is that you need to protect. Assess your risks. What could potentially cost your business a lot of money? A great rule of thumb is to protect anything you would not be able to pay for out of pocket. Do you have expensive machinery or equipment that you would not be able to afford to fix? Could you be liable for personal injury?

Once you have assessed your risk and determined which policies you would like to purchase, find a reputable insurance agent. Ask around your network, especially other small businesses, for a reliable and inexpensive insurance agent. They will be able to find you policies that match your needs. When it comes to buying anything for your business, it is important to shop around. Don’t buy the first policy you are offered. Instead, gather information and prices from multiple agencies and make sure you get the most bang for your buck.