How Much Business Insurance Do I Need? (2025)

Updated: January 19, 2026

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While there is no perfect answer to how much business insurance coverage you should get, typically most companies can use this as a good starting point:

General Liability Insurance: $1 million per occurrence / $2 million aggregate
Workers' Comp Insurance: State required coverage (typically if you have employees)
Commercial Property Insurance: Insure your business's personal property up to its actual replacement cost
Business Interruption Insurance: 3–12 months of income/ongoing expenses coverage (add to commercial property policy)
Commercial Auto Insurance (If you use business vehicles): $1 million CSL

However, the right amount of coverage depends on the work you do, who you provide products or services for, your location and the size of your company.

Below, we’ll show you how to adjust these baseline limits and types of coverage so your insurance matches your actual risks.

How To Determine How Much Small Business Insurance You Need

Other than our tools and guidance, we cannot understand all the complexities specific to your business. So, in an effort to better help you find the coverage you need, we made a step-by-step process to deciding coverage for yourself, assessing risks specific your small business.

1
Review legal and contractual business insurance Requirements
Start by identifying any insurance coverage and minimum limits you’re required to carry.
- Legal requirements: Some coverages are mandated by law (most commonly workers’ compensation, and in some cases commercial auto requirements when vehicles are used for work).
- Client, landlord, or lender requirements: Contracts often require specific insurance policies and minimum limits. Common requirements include general liability coverage, commercial property insurance, surety bonds, and endorsements like additional insured and primary and noncontributory.
2
Estimate what your business can afford to pay out of pocket
Insurance amounts should be based on what would financially harm your business, not just what you might need.

Use two simple checks:
- Cash flow and savings buffer: How much could your business realistically absorb after an incident without disrupting operations?
- Deductible comfort level: Choose deductibles based on what you could pay quickly if a claim happens without disrupting payroll, rent, or essential expenses.
3
Calculate the value of your business property and assets
Property coverage should reflect the replacement cost of what your business depends on. Add up the actual replacement value (what it costs to buy a new replacement) of equipment, tools, inventory, furniture, electronics and specialized property. If you rent a space, consider whether lease terms make you responsible for certain improvements.
4
Identify your biggest claim risks
Next, estimate the realistic ways your business could face a large loss and separate them into two buckets:
- Risks where your business could be liable: customer injuries, third-party property damage, product-related injury, reputational harm, or financial losses caused by your services
- Risks that could damage or disrupt your business: fire, theft, storm damage, vandalism, equipment loss, or shutdown-related losses
This helps clarify whether you need more liability protection, more property protection, or both.
5
Pressure-test your limits using realistic loss scenarios
You don’t need perfect data, but you do need to gauge coverage limits when you'll likely need them. Identify a rough cost for a serious incident happening, how much of an expense you can afford in those cases and determining if any contracts expose you to higher risk (if connected to an incident) will give you a worst-case scenario profile. Once you have an understanding of this, you can easily choose limits based on this worst-case scenario.
6
Match coverage types to your risks
Once you know your biggest risks, match them to coverage:
- Liability risks: General liability, professional liability (E&O), commercial auto, umbrella
- Property/shutdown risks: Commercial property, business interruption
- Data exposure risks: Cyber liability
- Transportation-related risks: Commercial auto
- Employee injury risks: Workers’ comp
7
Review and update your coverage as your business changes
Schedule yearly reviews of your business insurance portfolio as your firm grows, adds new services, hires employees, or acquires assets. Update your policies immediately after major changes like expanding to new locations, launching new products, or signing large contracts. Regular reviews ensure you always know how much commercial insurance you need and keep yourself protected.

How To Choose Coverage Limits By Policy Type

Once you have a baseline, the next step is making sure your coverage limits match the risks you’re actually exposed to. Each policy has different coverage structure so the right amount depends on how claims are paid, what drives costs, and how quickly losses can escalate.

Use the guides below to understand what commonly needed policies are designed to cover, when it’s worth carrying and baseline coverage recommendations based on risk profile.

General liability insurance covers claims that your business caused third-party bodily injury, third-party property damage, and legal defense costs. If your business works with the public, operates in a physical location, works on job sites, or signs leases/contracts, general liability is usually foundational.

Use this table to choose your liability starting point based on how often you interact with the public, work on client property, or face injury severity risk.


Low (office-based, low foot traffic, minimal client site work)	$1M / $2M ($500K / $1M if contracts allow)	Consultants, agencies, office services, low exposure SMBs
Moderate (regular customer interaction OR occasional on-site work)	$1M / $2M + $1M umbrella	Retail, salons, gyms, cleaning companies, many service businesses
High (job sites, high public exposure, higher injury severity)	$1M / $2M + $2M umbrella	Contractors/trades, event operations, high-traffic businesses

Commercial property insurance covers your business property (equipment, tools, inventory, furniture, electronics) after losses like fire, theft, or vandalism. It applies if replacing property would significantly harm cash flow.

Set property limits around replacement cost by estimating how expensive it would be to replace your essential equipment, tools, and inventory.


Low (basic equipment, little/no inventory)	$25,000	Home-based/service businesses
Moderate (meaningful equipment + supplies/inventory)	$100,000	Many typical SMBs
High (expensive equipment OR significant inventory)	$250,000	Restaurants, retail, contractors, warehouses

Business interruption (business income) policies help replace income and pay ongoing expenses if a covered claim forces a temporary shutdown. The coverage type is supplementary and cover any interruptions caused by items covered under its parent policy (typically commercial property and cyber insurance). It applies most to location-dependent businesses and any company who has risk of cyber-attacks.

Select business interruption coverage based on how long it would realistically take your business to recover revenue after a shutdown.


Low (can operate remotely, minimal downtime impact)	3 months	Remote-first services, mobile businesses
Moderate (location-based but recoverable quickly)	6 months	Most storefront/service-location SMBs
High (single location + long rebuild/recovery)	12 months	Restaurants, medical offices, manufacturing

Commercial auto insurance covers liabilities if a business vehicle causes injury or property damage. It is a required coverage by law and requirements are much higher for passenger vehicles. Aside from this, even minor accidents can become expensive if someone would like to take an accident you cause to court.

Below we've given you high level coverage recommendations based on your risk exposure. If you are in the transportation sector requirements may be higher than our recommendations, so it is best to use industry and vehicle type specific legal standards instead.


Low (occasional business driving, 1–2 vehicles)	$1M CSL	Trades, services, small operations
Moderate (frequent driving OR multiple drivers)	$1M CSL + $1M umbrella	Service fleets, regular travel/driving
High (delivery/fleet OR high mileage exposure)	$1M CSL + $2M umbrella	Delivery, logistics, fleet-heavy businesses

Professional Liability or E&O insurance covers claims that your services/advice caused client financial losses due to negligence, incomplete work or advice that causes damage. It applies to professional service businesses more than physical-location businesses.

Professional liability limits are best tied to the financial stakes of your client work, including the cost of errors, delays, and legal defense.


Low (low-stakes services, small project size)	$1M per claim	Most service businesses (safe baseline)
Moderate (client work impacts revenue/operations)	$1M per claim	IT, marketing, consulting, real estate services
High (large clients OR contract-required limits)	$2M per claim	High-budget projects, regulated services

Cyber insurance covers costs from ransomware, breaches, and system downtime. It applies to most SMBs that store customer/employee info or rely on systems to operate.

Cyber limits should match your data exposure and downtime risk, especially if your business relies on online systems or stores customer information.


Low (minimal data + low system dependency)	$250K	Small service businesses
Moderate (payments, customer data, cloud dependency)	$1M	Most SMBs
High (high record count OR high downtime cost)	$2M	E-commerce, data-heavy businesses

Commercial umbrella insurance increases your total liability protection above underlying policies (usually GL and commercial auto). It’s best when your main concern is one severe lawsuit or contract-required higher limits.

Use this table if you’re deciding whether you need extra liability beyond standard policies, especially for contracts, vehicles, and high-severity incidents.


Low (no vehicles, low public exposure, no large contracts)	$0 (usually not needed)	Low exposure professional services
Moderate (leases/contracts OR moderate customer exposure OR some driving)	$1M	Many typical small businesses
High (job sites OR regular driving OR severe injury exposure)	$2M	Contractors, vehicle-heavy businesses, high claim severity risk

Choosing Business Insurance By Company Growth Stage

Business insurance should change as your business changes. More customers, bigger contracts, higher revenue, more vehicles, and more expensive equipment all increase the potential for a larger financial loss.

Below we've summarized common stages businesses come across as they grow and what coverage upgrades you'll likely have to make to have adequate protection.