What is business insurance?

Business insurance is a set of policies that protect a company from financial losses caused by lawsuits, property damage, employee injuries, or other covered events. Most small businesses need at minimum general liability coverage; many lenders require proof of insurance before approving financing.

Business insurance is a broad term for commercial insurance policies that protect a business's assets, operations, and people. Unlike personal insurance, the range of coverage types is wide — from slips and falls on your premises to data breaches to a vehicle accident in a company van. The right mix depends on your industry, size, number of employees, and whether you own or lease property.

Core policy types for small businesses

General liability (GL) — covers third-party bodily injury and property damage claims, and advertising injury. The most common starting point for any business.
Commercial property — covers your building, equipment, and inventory against fire, theft, and certain weather events. Required by most commercial landlords.
Business owner's policy (BOP) — bundles GL and commercial property at a lower combined premium; designed for small to mid-size businesses.
Workers' compensation — covers medical costs and lost wages for employees injured on the job. Required by most states once you have at least one employee.
Professional liability (E&O) — covers claims that your service, advice, or work caused a client financial harm. Common for consultants, agencies, and service firms.
Commercial auto — covers vehicles used for business purposes; personal auto policies typically exclude business use.

Why lenders and landlords require it

Most commercial lenders require proof of general liability and commercial property insurance before closing a loan — especially SBA loans, which have explicit insurance requirements. The SBA's loan program guidelines specify that collateral securing an SBA loan must be insured. Landlords also routinely require GL certificates naming them as an additional insured before you can take occupancy.

How much does business insurance cost?

A basic GL policy for a low-risk small business can run several hundred to a couple thousand dollars per year; a BOP combining GL and property costs more depending on revenue and location. Workers' comp premiums are calculated per $100 of payroll and vary by job classification. The SBA's guide to business insurance offers a framework for deciding what coverage your business needs.

Insurance and business financing

If you're applying for financing and don't yet have adequate coverage, getting insured first speeds the process. Lenders in our network may have their own insurance requirements. When you apply with ClearValue Lending, your advisor can clarify any coverage requirements for the product you're pursuing — one application routes to one matched lender partner.

What the SBA says

Collateral securing an SBA loan must be covered by hazard insurance, and the SBA may require additional coverage depending on the loan and business type. — SBA — Loan Programs
Most states require employers to carry workers' compensation insurance once they have at least one employee; requirements vary by state and industry. — SBA — Get Business Insurance
The SBA recommends that every small business carry general liability insurance and consult an agent who specializes in commercial coverage. — SBA — Get Business Insurance

Key takeaways

Business insurance is a category, not a single policy — most small businesses need at least GL and, if they have employees, workers' comp.
A business owner's policy (BOP) bundles GL and property coverage at a lower combined cost than buying each separately.
SBA lenders require hazard insurance on collateral; commercial landlords typically require GL certificates.
Workers' comp is legally required in most states once you employ one or more people.
Having insurance in place before applying for financing removes one common lender requirement from the checklist.