In 2025, knowing what kinds of business insurance there are is critical to protect your business from unknown events. However, which type do you really need? Starting from general liability to workers’ compensation, all have different functions.
General liability insurance protects an individual from accidents, while product liability covers issues related to your products. Professional liability is essential for services-based businesses. Other types of insurance include commercial property insurance and workers’ compensation, which help keep your physical assets and employees safe.
Knowing these kinds of business insurance can help you choose the right coverage and avoid costly mistakes. Stay ahead in 2025 by making sure your business is properly covered with the right insurance policies.
Here are the 7 kinds of business insurance you must know
1. General Liability Insurance
General Liability Insurance (GLI) helps businesses by covering accidents or damages that happen during their work. For instance, if a customer slips and falls, GLI can help pay for their medical bills. If a worker accidentally breaks something at a client’s place, GLI can help fix it. It also protects businesses from lawsuits if something bad happens in ads.
Here’s what GLI covers:
- Bodily injury (like someone getting hurt)
- Property damage (such as a broken window)
- Advertising injury (such as being sued over false ads)
But GLI does not cover:
- Employee injuries (Workers’ Compensation Insurance covers that)
- Pollution or damages to the business’s own property
- Contract issues (such as disputes)
GLI is very significant because accidents are pretty costly. For instance, if a customer falls, the business might have to pay $100,000. If a worker breaks something, it could cost $200,000. That’s why GLI is one of the important types of business insurance.
In 2025, GLI prices are increasing by 2%-8%. Insurers are adding the protection of new risks, such as cyber threats and social media ads. It makes GLI an important part of the different types of business insurance to keep the different businesses safe.
2. Product Liability Insurance
Product liability insurance helps businesses if their products cause injury or damage. It covers such problems as those that are wrong in the production, design, or even advertisements of the product. For instance, a factory-made toy broke and hurt somebody, or perhaps a gadget due to its terrible design injured a few people. It can also provide help if there is no obvious warning for any risk posed by the product.
Here is what product liability insurance covers:
- Damage caused by flaws in a product.
- Legal costs to defend claims.
- Medical costs for injured parties.
- Compensation for those whose products caused harm.
But that’s not all. For instance:
- Workers compensation covers injuries of workers.
- Claims in which injury was done on purpose or through wilful neglect are not covered.
In 2022, there were over 5,800 claims in the U.S. Businesses need this type of insurance to protect themselves. It’s especially important now, as more people shop online and new safety rules are coming. Review your types of business insurance to stay safe.
3. Professional liability insurance
Professional liability insurance protects people who give advice or services in jobs like law, healthcare, or engineering. If someone makes a mistake and causes harm to a client, this insurance helps pay for the costs. It’s very important for people in these jobs to have this kind of insurance.
- Protects against mistakes or errors in advice.
- Covers legal costs if someone sues you for negligence.
- Helps pay if there’s a breach of contract.
- Doesn’t cover intentional harm or injuries to people.
- Excludes problems related to employees.
Most small businesses carry professional liability insurance. About 59% do. Claims of mistakes or negligence occur frequently. For instance, doctors can be sued for malpractice in their medical treatment and those cases may run into millions.
Business Insurance is becoming pricey. Experts say that in 2025, prices will rise by 10% to 15%. Additionally, more claims are coming from tech mistakes. This shows how important it is to have good insurance today, especially for new types of risks.
4. Commercial property insurance
Commercial property insurance keeps businesses away from risks that might arise through fire, theft, or storms. It helps in the protection of buildings, equipment, and other important things required to operate a business. If this does not exist, businesses might be losing money and will have problems. This is the most significant business insurance type as it protects the physical assets of the business.
What does it cover?
- Replaces or reconstructs buildings
- Protects equipment, furniture, and inventory.
- Replaces lost income when operations stop (business interruption insurance).
- Covers items being moved, like with inland marine insurance.
Not all things are covered. Floods and earthquakes require a separate policy to cover. Anything that results from wear and tear, like outdated equipment, is not covered, nor is vandalism. Losses due to crimes may require a separate policy as well.
In 2021, businesses in the U.S. spent $254 billion on this insurance. More than 60% of businesses rely on it for safety. By 2025, stronger materials and better risk management will be key for insurance. Inflation is also making businesses update their coverage.
5. Home-based business insurance
Home-based business insurance is important for people who run businesses from home. The ordinary home insurance will not cover the business risks; therefore, this special insurance covers your work against problems such as accidents, theft, or loss of business items, and any interruption that might stop your work. About 50% of small businesses begin at home; therefore, this insurance will save you from large financial losses. It is one of the most important types of business insurance for home setups.
General liability insurance: Covers accidents or injuries caused while working for your business.
Professional liability insurance: Helps in case someone claims that you made a mistake in your work.
Business property insurance: Protects your tools or items from theft or fire.
Cyber liability insurance: Guards against online risks such as hacking or stolen data.
This insurance doesn’t cover everything. For example, it won’t cover damages from floods, personal claims, or normal wear and tear. Experts say that in 2025, home-based insurance will offer better coverage options and stay important as one of the key types of business insurance for the future.
6. Business owner’s policy
A BOP is a special kind of insurance that saves small businesses money. It combines two important types of insurance: property insurance and liability insurance. This package protects things like buildings, and equipment, and even helps if someone gets hurt because of your business. Instead of buying separate insurances, a BOP is a smart, cost-effective choice for small business owners.
What BOP covers:
- Property damage by fire, theft or vandalism
- Insurance against general accidents, for injuries or property.
- Business interruption – This insurance offers coverage when there is no source of income generated during the calamity.
- Added options, among them professional indemnity cover about mistakes in offering services
- Liability cover especially about cyber offenses.
But BOPs do not cover everything. For instance, it does not cover protection for business cars, floods, earthquakes, or employee injuries. For these, you will need other types of business insurance such as worker’s compensation or separate policies.
Did you know? Small businesses have adopted BOPs as 60% use them due to great protection. The average annual cost of a BOP is $684, though it can vary based on the business type. By 2025, insurance companies might add better cyber coverage to their packages, which would make BOPs even more beneficial for small businesses.
7. Workers’ Compensation Insurance
Worker’s compensation insurance is a business insurance that protects both the workers and the employers whenever someone gets injured at work. It covers for medical treatment as well as income lost due to being unable to go back to work immediately. While most states mandate this type of insurance, it is optional in Texas. In fact, a no-fault system is implemented so that employees do not need to prove their case to claim help; they also avoid filing lawsuits.
- It covers medical treatments such as hospital visits, medicines, and therapy.
- It replaces part of the worker’s wages, usually two-thirds of their salary.
- It offers disability benefits for short-term or long-term injuries.
- It helps workers learn new skills if they cannot return to their old jobs.
- It pays death benefits like funeral costs for dependents in case of workplace deaths.
Some things are not covered, such as injuries caused by drinking alcohol, accidents while commuting, or non-job-related activities. Construction workers often pay higher premiums-about 4.4% of payroll, compared to the 1.6% average. Motor vehicle accidents are the most expensive claims, costing about $90,914 each.
Premium rates may escalate in 2025 due to inflation. New technologies, such as AI, wearable tech, and telemedicine, will make workplaces more secure while improving the process through claims. Other types of business insurance, which include worker’s compensation, are always changing to benefit workers and businesses.
Conclusion
In conclusion, it is important to understand what types of business insurance are available for any protection in the year 2025. Each type ensures benefits, including covering property damage and worker injuries. You ensure that your company will be protected from anything that may come its way if you pick the right types of business insurance. Stay updated, review your needs from time to time, and ensure that you change your coverage when your business grows. This way, you will always have the right protection when you need it most.
FAQs
- What is business insurance?
Business insurance protects owners from risks like legal costs, mistakes, stock damage, and business interruptions. It ensures financial stability by covering various potential losses, including liability claims.
- What is a new business in insurance?
New Business Premium (NBP) refers to premiums gained from newly sold insurance policies within a set period. It indicates the insurance company’s sales success and customer growth potential.
- What insurance types are most profitable?
Life insurance is the most profitable due to high premiums and long-term contracts. It generates substantial income for agents, especially in the first year with commission rates up to 120% of the premium.
- What is the first form of insurance company?
The first life insurance company, the Amicable Society for a Perpetual Assurance Office, was founded in 1706, marking the beginning of the modern insurance industry.
- Why is insurance important?
Insurance provides crucial protection against unexpected events, covering costs from accidents, illnesses, and other emergencies. It offers financial security for individuals and their families during tough times.
