Originally published in March 2022. Last updated on June 30, 2025.
You have car insurance to cover you after a fender bender, and house insurance as backup in case of a leak or fire.
But what happens if you accidentally damage a client’s property or an employee gets injured while on the job? A solid business insurance policy could be the difference between bankrupting your company and keeping cash flow steady.
There are many different types of business insurance to choose from, depending on your services, industry, and situation.
That’s why it’s so important to learn what your policy options are, how much they cost, and why you need them. Then you can choose the right coverage for your business, no matter what kind of service company you own.
Small business insurance options for home service pros:
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General liability insurance
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Commercial property insurance
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Business income insurance
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Commercial auto insurance
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Workers’ compensation insurance
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Professional liability insurance
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Product liability insurance
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Employment practices liability insurance
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Crime insurance
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Cyber liability insurance
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Key person insurance
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Commercial umbrella insurance
⚠️ Disclaimer: Your existing insurance policy may not include all the insurance types listed in this article. Always speak with your insurance provider to confirm what your policy will cover.
What is small business insurance?
Small business insurance protects your business from potential risks and liabilities.
It’s made up of multiple policies unique to your industry and services, and can offer coverage for things like:
- Accidents and injuries
- Property damage
- Lawsuits
- Stolen tools and broken equipment
- Vehicle accidents
- Fire and theft
For example, if you or an employee accidentally crack a customer’s window while trimming trees, you could file an insurance claim to help cover the repair costs.
How much does small business insurance cost?
Depending on your needs, basic service business insurance can cost between $40 and $200 USD each month. Additional coverage for policies like commercial auto insurance or cyber liability will increase your rate.
That number can also fluctuate based on:
- Whether your business is high-risk (like electrical) or low-risk (like pressure washing)
- Your business size and revenue
- The city and state you operate in
- How many employees you have
- The type and amount of coverage you need
- Your history of past claims
Tailor your insurance coverage to match your business needs and budget by picking and choosing the policies that make the most sense for your industry and services.
1. General liability insurance
General liability insurance is the most basic insurance coverage available. Virtually every service business needs it because it covers claims related to:
- Bodily harm (physical injuries like cuts, bruises, or broken bones)
- Property damage
- Personal injury (non-physical harm like invasion of privacy or false statements)
For example, if you’re up on a ladder and accidentally drop a tool on a client while they’re walking by, or if an employee accidentally knocks over an expensive vase while moving furniture.
If the client makes a claim against your business, and it’s approved, general liability insurance would cover the claim and any related legal costs.
Who needs general liability insurance?
General liability insurance is strongly recommended for every service business, and it’s often required by local and state licensing boards depending on your trade.
2. Commercial property insurance
Commercial property insurance covers damage to physical property that you own, lease, or rent. For example, your office, storage space, or equipment.
It protects you in the event of:
- Fire, smoke, electrical, or weather damage
- Some types of interior water damage
- Structural damage or building collapse
- Damage caused by vandalism, riots, or vehicle collisions
Commercial property insurance doesn’t usually cover theft or property damage that takes place off-site, like if your tools were stolen from your truck in a public parking lot or at a client’s home.
For that type of business insurance, you’d need tools and equipment insurance or separate rider coverage instead.
Commercial property insurance also doesn’t typically cover natural disasters like earthquakes or floods. If your area is prone to those conditions, you’ll need to get separate policies for each type of disaster you’re at risk for.
Pro Tip: If your business runs out of your home office, add a rider for business items to your homeowner’s insurance. This will protect a small amount of company equipment and provide some liability coverage.
Who needs commercial property insurance?
Any service business owner who owns, rents, or leases commercial space like an office, warehouse, workshop, garage, or storage unit, especially if you store tools or equipment there.
Commercial property insurance can even be a good option if you run your business from home and your home insurance policy doesn’t cover business-related property.
3. Business income insurance
Business income insurance (also known as business interruption insurance) protects your business after an event that keeps you from doing business, like a robbery, fire, or tornado.
You can use the insurance payout to help with:
- Lost income
- Operating costs
- Employee payroll
- Rent or loan payments
- Relocation costs
- Other affected business operations
The average policy will cover your expenses for 30+ days, so you can get back on your feet. It may not kick in until shortly after the event, but your insurance provider will reimburse you for necessary purchases once you submit your receipts.
This type of policy usually doesn’t cover large-scale disasters like floods, utility outages, or a pandemic. It also won’t cover actual property damage—commercial property insurance takes care of that.
Who needs business income insurance?
Any service business that could be impacted by service disruptions can benefit from this type of insurance coverage. For example, if you have a physical location you rely on to run your business or use to store tools and equipment.
Business owner’s policy
A business owner’s policy (BOP) is pre-packaged insurance for small business owners. It often combines:
- General liability insurance
- Commercial property insurance
Some policies include business income insurance, although it may not be offered by default.
You can get this type of policy through most insurance providers and can typically add extra coverage, like cyber liability or equipment breakdown coverage, as needed.
Pro Tip: If you’re a sole proprietor and don’t employ any staff, a business owner’s policy may be the only coverage you need.
4. Commercial auto insurance
Have a company vehicle? Then you’ll need commercial auto insurance to protect yourself, your employees, and other drivers on the road.
Most auto insurance policies cover:
- Personal injury and property damage
- Collision-related medical expenses
- Vehicle damage and theft
Pro Tip: This doesn’t just apply to your commercial car, truck, trailer, or van. If your business uses other types of vehicles, like a snow plow or dump truck, get them insured too.
Who needs commercial auto insurance?
Any service provider who uses a commercial vehicle to:
- Drive to and from job sites
- Pick up, deliver, and transport materials and supplies
- Haul tools or equipment
- Provide mobile services like junk removal
Insurance can be easy if you get an insurance agent. Just take it slow. Just take it seriously.
If you take it seriously and go about it, because I think that you and I just want to get to our work. We want to get to our clients.
5. Workers’ compensation insurance
Workers’ compensation is what protects you if your employees are injured while on the job. It typically covers:
- Medical care and equipment
- Physical therapy
- Lost wages (paid out as disability)
- Family financial support (in case of death)
Your policy won’t cover workers if they’re injured while under the influence or engaging in personal, non-work-related activities on the job site.
READ MORE: 5 job safety analysis forms to share and use on jobsites
Who needs workers’ compensation insurance?
Any service business with employees needs workers’ compensation insurance. In most states, it’s required as soon as you hire your first employee, whether they’re part-time, full-time, or seasonal.
Some states also require coverage for subcontractors, so be sure to check with your local workers’ compensation board. To find out whether workers’ compensation insurance is required in your state, review your state’s labor laws here: https://www.dol.gov/agencies/owcp/wc
6. Professional liability insurance
Professional liability insurance adds to the protection you get from general liability insurance. It can cover claims and lawsuits related to professional issues like:
- Making a mistake or giving a client bad advice
- Breaking a contract due to negligence or failure to complete the work
- Not meeting an agreed-upon project deadline
For example, if you put in new sod for a client’s lawn and your employee told them not to water it for two weeks and the grass died.
Who needs professional liability insurance?
Any service business that uses contracts can benefit from professional liability insurance, but it’s particularly important for service providers who:
- Do design work, like landscapers
- Offer advice for maintenance or care
- Provide consulting, like home energy efficiency evaluators
7. Product liability insurance
Product liability insurance protects your service business if the products you manufacture and sell cause harm to clients or their property. This could be caused by design flaws, product defects, or poor warning labels.
For example, if a house cleaning company that sells its own products fails to include a disclaimer or warning on the label of its all-purpose cleaner that it can cause skin irritation, it could be held liable if a customer has a reaction.
Most standard general liability insurance policies do include coverage for products related to business operations, but not products that you manufacture and sell under your brand. In that case, you would need to include or extend your coverage to include product liability insurance.
Who needs product liability insurance?
You should have product liability if your service business makes and sells its own products, such as:
- Fertilizer or weed control spray
- Household cleaners
- Pool chemicals
8. Employment practices liability insurance
Employment practices liability insurance offers protection from claims related to your employment practices, such as:
- Unfair termination
- Discrimination
- Sexual harassment
Insurance protects you by covering legal costs and settlements in the event a job candidate, current employee, or former staff member files a claim against you.
When expanding your team to include staff, it’s important to read up on your state’s employment guidelines or hire an HR professional to ensure you don’t accidentally break any laws.
READ MORE: How to fire someone nicely
Who needs employment practices liability insurance?
Any service business owner who is planning to hire staff (or who already has employees) should have employment practices liability insurance. This includes:
- Making job postings
- Conducting interviews
- Hiring decisions
- Employment practices
It’s important to note that even if you don’t hire an employee, a potential candidate can still file a claim against you if they feel you discriminated against them at any point during the application, interview, or hiring process.
READ MORE: Questions to ask a new employee before and after you hire them
9. Crime insurance
Unlike commercial property insurance, which covers you in the event of theft, vandalism, or burglary, crime insurance protects your business’s assets from risks such as:
- Employee theft or forgery
- Third-party fraud or forgery
- Accepting counterfeit currency
It covers legal costs, property value assessments, and other related fees in the event of criminal activity. And it offers protection to your clients if you’re responsible for their property while on the job.
Who needs crime insurance?
Any service business where employees handle cash, checks, or valuable client property should have crime insurance.
For example, service providers with access to clients’ homes, such as:
- House cleaners
- Pet sitters
- Dog walkers
- Locksmiths
- Movers
10. Cyber liability insurance
Cyber liability insurance (sometimes called data breach insurance) protects your business if a security breach affects your business or client data.
It’s different than standard crime insurance because it doesn’t offer coverage for physical property damage. Instead, it covers costs associated with:
- Telling clients about the data breach
- Paying to get your data back
- Monitoring business and client credit
- Repairing your business’s public image
- Any legal activities related to the breach
Who needs cyber liability insurance?
It’s important to have cyber liability insurance if you:
- Accept online payments
- Use a field service CRM for online booking, scheduling, and client management
- Store any customer data like names, addresses, or payment details
- Communicate with clients via email or an online portal
- Text with clients and keep their information in your messages
11. Key person insurance
Key person insurance is what protects your business if you (the owner) die or are physically no longer able to work. It can offer support by:
- Making up for lost income due to your absence
- Hiring or training an employee to take over the role
- Paying any debts related to your absence
It can also apply to other employees who keep the business running. For example, a lead technician who manages jobs, client relationships, and junior staff, or an office manager who oversees billing, scheduling, and payroll.
Just make sure to include them on your key person insurance policy so you’re not the only one covered.
Who needs key person insurance?
You should have key person insurance for your service business if:
- You’re a sole proprietor, and your business relies entirely on your knowledge and labor
- You have a small team where vital roles like operations, job management, or client communications rely on a single person
- Your business has critical employees, like a lead technician or office manager, whose absence would significantly disrupt and impact operations
In short, if you or a staff member were no longer able to work, and it would cause your business to lose clients, stall jobs, or struggle financially, it’s worth having.
12. Commercial umbrella insurance
Commercial umbrella insurance is what protects you in the event of a major incident that your standard policy doesn’t completely cover. Think of it as an extension to your usual liability.
For example, if you max out your commercial auto insurance due to a massive claim, umbrella insurance will help you avoid paying the remainder out of pocket.
Who needs commercial umbrella insurance?
Commercial liability insurance is beneficial for service businesses that deal in high-value contracts, expensive equipment, or significant liabilities.
For example, if you:
- Use a fleet of commercial vehicles
- Work in a high-risk trade or on high-risk job sites
- Handle large commercial or residential construction projects
- Use expensive tools, machinery, or heavy equipment
- Provide services using hazardous materials or chemicals
How much insurance coverage does a small business need?
The amount of insurance coverage you need depends on your industry, the risks you face, and your legal and contractual requirements.
Many service businesses, regardless of their industry, will need general liability, workers’ compensation, commercial auto, tools and equipment, and commercial property insurance.
But the services you offer can impact the additional policies you need. For example:
- Roofing insurance typically requires higher liability limits due to potential fall hazards and property damage, as well as coverage for specialized equipment and materials.
- Electrical insurance includes protection against electrical hazards as well as strict licensing compliance.
- Snow removal insurance may benefit from protection for weather-related risks and potential damage caused by snow and ice removal activities.
- Plumbing insurance should include coverage for water damage and potential claims caused by faulty repairs or installations.
- Cleaning insurance usually covers accidental injuries or damage to clients’ properties, as well as exposure to chemicals, and theft.
How to choose an insurance provider
With so many insurance providers to choose from, it can be hard to figure out which is the best option for your budget and business.
Start by making a list of potential providers that fit your needs, then evaluate them based on:
1. Policy types
Make a list of the coverage you want based on your industry, services, and needs.
For example, do you need commercial auto insurance? What about crime insurance? Or are you just looking for general liability coverage?
Then see which policies are available from each provider—not all of them will offer every type of insurance. Then make sure the policies you need are available in your state, too.
2. AM Best rating
AM Best is a credit rating system for insurance companies. For example, an A-rated company will be the most financially stable and better equipped to pay out claims.
Providers with a lower rating, like anything below a B+, may have financial struggles, leading to potential issues if you ever need to make a claim.
3. Customer service
Customer service is essential when it comes to insurance. In the event of an emergency, you need to be able to get in touch as soon as possible so they can walk you through the next steps.
Look for reviews online to get a feel for each provider’s customer support options, coverage, and availability. Aim to find one that offers 24/7 customer service, because you may need help outside of standard working hours.
4. Limit and deductible
Your limit is the maximum amount an insurance company will pay to cover a claim.
A deductible is what you pay out of pocket before insurance coverage kicks in for the rest.
Ideally, your policy would have a high limit and low deductible, but those types of policies typically come with a higher price tag.
Find the best deal you can by getting a few quotes online before making a buying decision.
Why is business insurance important?
Business insurance isn’t just important because it can allow you to legally offer your services to clients. It comes with many other benefits to you, your company, and your clients, including:
1. Protecting you against accidents or property damage
Working in a service industry comes with risks. On-the-job injuries and accidental property damage happen no matter what hazards come with your chosen industry.
For example, a house cleaner may accidentally damage a floor with the wrong cleaner, or a plumber may mistakenly install a dishwasher with a leaky connection.
And the same goes for bumps, bruises, and even broken bones.
But if a client, employee, or property is damaged, business insurance can protect your assets by helping you to cover costs without using your own funds.
2. Replacing stolen and damaged equipment
You rely on tools and equipment to get the job done. If they’re stolen or damaged, having business insurance means you can replace them quickly. This prevents extended job delays and helps keep cash flow steady.
3. Helping you take on bigger jobs
Certain trades come with licensing requirements, like electrical, because of how high-risk they are.
But big contracts sometimes also require tradespeople from any industry to have insurance just to take on the work.
For example, municipal jobs and commercial projects are often only given to insured service providers.
That means that without insurance, you could be missing out on high-value jobs.
4. Building trust with clients
The more legitimate your business, the easier it is for clients to trust you. Small business insurance boosts your professionalism and gives clients peace of mind knowing that if anything goes wrong, their property is covered.
5. Supporting employees
If an employee is injured on the job, your business’s workers’ compensation insurance gives them peace of mind. It can cover medical bills and lost wages, so they can focus on getting better instead of worrying about expenses.
6. Offering legal protection
Miscommunication, mistakes, and accidents can lead to costly legal battles. Like if a deck you built collapses or you installed the wrong tiles in a bathroom.
If you’re faced with a lawsuit, insurance can pay your legal and settlement fees without eating into your business assets. That way, you can stay afloat instead of struggling to stay open.
7. Keeping cash flow steady
If your business is impacted by a fire, theft, or other major disruption, certain types of insurance (like business income insurance) help cover lost income. This helps you focus on getting back on your feet so you aren’t left scrambling to cover bills and pay employees.
8. Enabling you to respond quickly when the worst happens
You don’t want the worst to happen, like a lawsuit, onsite injury, or fire. But if they do, having business insurance means you can address the situation quickly, getting you back to normal faster.
Just make sure you keep detailed records of jobs, clients, expenses, and team activity to make filing a claim easier.
If you aren’t sure how to get started, using field service management software like Jobber can help. It securely stores customer information, tracks expenses, and logs job details you can use to support your claims and get paid faster.