Four Categories of Business Insurance

There are many different kinds of business insurance, but all fall into four broad categories. Understanding those categories may give you a better idea of the type of insurance you need and the purpose behind purchasing business insurance. The categories are:


Almost every business involves some form of property, be it an office, equipment, or vehicles. This property is required in order for the business to continue operating. If something happens to that property, income ceases to flow and a business can go under if the loss of property isn’t somehow compensated for through insurance. Property insurance pays for repairs to that property or for replacing that property if it is beyond repair. Casualty insurance pays for types of property damage, such as earthquake and flood damage, that may not be covered by ordinary property insurance. Business auto insurance pays for damages relating to a company car.

Liability Insurance

Businesses get sued. If you think you have the first lawsuit-proof business in the history of commerce, then feel free not to carry liability insurance, but it isn’t recommended. Liability insurance pays for damages incurred in a lawsuit. The lawsuit can be about someone injuring themselves on your property or someone complaining that they were harmed in some way by a product that you sell or manufacture. You’ll feel more comfortable about your future if you have insurance to cover this possibility.


Business is about income. Unfortunately, business is also about expenses. As money comes in, a lot of it has to go back out to pay expenses, such as rent and salaries. Even if something happens to interrupt your business’s income—a fire in your offices, for instance, or the failure of a vital piece of equipment—you’ll still need to keep up with expenses. Business interruption insurance guarantees that you’ll have the income you need even if your business is temporarily unable to function.


Finally, businesses involve people. Employees need to be sure that they will have a continuing income if involved in a work-related accident. That’s why workers’ compensation insurance is mandated by law. In addition, you may want to maintain disability insurance for your employees so that they’ll have income after a disabling accident. And to attract the best employees, you’ll want to offer health insurance as a benefit that adds value to their salaries.

Other frequently asked questions about business insurance