What insurances should a small business have? 

Insurance is a critical component of a comprehensive risk management strategy for any small business. It provides a safety net that can help protect your business from unforeseen financial losses due to accidents, natural disasters, lawsuits, and other liabilities. At VARGAS GUERRA, LLP, we understand the complexities and challenges of selecting the right insurance coverage for your small business. Here's a guide to help you navigate the essential insurances that every small business should consider.

1. General Liability Insurance

This foundational coverage protects against financial loss as a result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments required during an appeal procedure. It's advisable for businesses of all sizes and types.

2. Professional Liability Insurance (Errors and Omissions)

Professional liability insurance covers businesses against claims of negligence, malpractice, or misrepresentation. This type of insurance is particularly important for businesses that provide professional services or advice, such as consulting, accounting, or legal services.

3. Property Insurance

Whether you own or lease your space, property insurance is essential. It covers equipment, inventory, furniture, and signage in the event of a fire, storm, or theft. However, it generally doesn’t cover mass-destruction events like floods and earthquakes unless specifically added.

4. Workers' Compensation Insurance

Once your small business hires its first employee, workers' compensation insurance should be added to your business’s insurance policy. This covers medical treatment, disability, and death benefits in the event an employee is injured or dies as a result of their work with your business.

5. Product Liability Insurance

If your business manufactures products for sale on the general market, product liability insurance is a must. It protects against financial loss as a result of a defective product that causes injury or bodily harm.

6. Business Interruption Insurance

This type of insurance is especially important for businesses that require a physical location to do business. It compensates a business for its lost income during events that disrupt the normal course of business.

7. Cyber Liability Insurance

In the digital age, cyber liability insurance has become increasingly important. This insurance protects businesses against damages resulting from electronic threats, such as data breaches or cyber-attacks. It's essential for any business that handles sensitive customer information.

8. Commercial Auto Insurance

Businesses that use vehicles for work-related purposes will need commercial auto insurance to cover the potential damage or injuries resulting from a car accident.

9. Directors and Officers Insurance

This type of insurance protects the directors and officers of a company against their actions that affect the profitability or operations of the business. It’s a critical coverage for companies with a corporate board or advisory committee.

How to Choose the Right Insurance for Your Business

The types of insurance your business needs depend on several factors, including the nature of your business, the types of risks associated with your industry, and where your business is located. It's crucial to assess your risks and consult with insurance agents or brokers to get tailored advice. Additionally, legal advisors specializing in business law can provide insights into the types of insurance that can offer the best protection for your specific business needs.


Choosing the right insurance coverage is just one aspect of protecting your business. At VARGAS GUERRA, LLP, we offer comprehensive legal advice to help you understand the legal implications of your insurance choices and ensure that your business is fully protected. Contact us for guidance on selecting the right insurance for your small business and for any other legal needs your business may have.

Making informed decisions about insurance can mean the difference between the failure and success of your small business in the face of adversity. Let VARGAS GUERRA, LLP help you build a solid foundation for your business’s future.