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Small business insurance: what to buy first
Small business insurance in buy-first order: general liability, employers' liability, E&O and product liability — and what Louisiana and Texas require.
Start with the cover that matches your risk: general liability first for almost everyone, workers' compensation the moment you hire, E&O if you sell advice, product liability if you sell a physical product — usually inside general liability.
Tools and guides
Five guides: the four liability covers a small business meets first, and the two states whose contractor rules change the answer.
- Employers liability insurance explainedEmployers' liability is Part Two of the workers' compensation policy: what it covers, the standard 100/500/100 limits, and when a stop-gap policy is needed.Read guide →
- Errors and omissions insurance costWhat errors and omissions insurance costs: Insureon's median of $88 a month, what drives the price, and why other medians differ.Read guide →
- General liability insurance LouisianaLouisiana general liability insurance for contractors: the LSLBC $500,000 minimum under Act 757, who must carry it, and what commercial contractors face.Read guide →
- General liability insurance Texas contractorTexas does not license general contractors or require them to carry general liability.Read guide →
- Product liability insurance costProduct liability insurance is usually bought inside general liability cover, not standalone.Read guide →
Start here: three questions
Three questions route you to the right page in one screen. Answer them in order.
Do you have employees?
If yes, workers' compensation is the requirement, and employers' liability comes with it as Part Two of the same policy — read the employers' liability guide for what Part Two covers, the standard 100/500/100 limits, and the four monopolistic states where a separate stop-gap policy is needed. If no, skip it: with no employees there is nothing for Part Two to attach to.
Do you sell a service or a product?
A service — advice, design, professional work — points to errors and omissions insurance, which covers financial loss from your work. A physical product points to product liability insurance, which covers injury or bodily harm a defective product causes — and which is usually bought inside general liability cover, not on its own. A business that sells both needs both answers.
Does a client, landlord or licence require proof?
Then the requirement is set by that contract or licence, not by a general state law. Contractors should read the two state pages first: Louisiana, where the licensing board mandates a $500,000 minimum, and Texas, where the state requires nothing from general contractors but licensed trades have statutory minimums.
The five covers in one table
Only workers' compensation is near-universally mandated. General liability, E&O and product liability are usually contract- or licence-driven, not state-mandated.
| Cover | What it covers | Who needs it | State-required? |
|---|---|---|---|
| General liability | Bodily injury, property damage, personal and advertising injury from premises, operations and products/completed operations | Almost every business | Rarely by state law; usually by contract or licence |
| Employers' liability | Lawsuits by employees that fall outside the workers' compensation statute | Any employer with workers' compensation | Comes with the compensation policy, except in ND, OH, WA and WY |
| Errors and omissions / professional liability | Financial loss from advice, errors and negligence | Service businesses | Sometimes by client contract or profession rule |
| Product liability | Injury or bodily harm from a defective product | Makers, wholesalers, distributors, retailers | Usually inside general liability, not a standalone requirement |
| Business owner's policy (BOP) | A bundle of the typical covers for a small firm, in one policy | Eligible small firms | No — a buying route, not a requirement |
What to buy first
- General liability first, for almost everyone. It is the cover clients and landlords ask for, and the policy the other covers sit inside or beside.
- Workers' compensation — with employers' liability — the moment you hire. Part Two comes with the policy in NCCI states; in the four monopolistic states, buy the stop-gap separately.
- Errors and omissions if you sell advice or services. General liability does not cover a professional mistake that only costs a client money.
- Product liability if you sell a physical product — usually inside the general liability policy, under products and completed operations cover.
A business owner's policy is the cheaper bundle for eligible small firms: the SBA describes it as a package combining the typical covers, which simplifies buying and can save money. It is a way of buying the covers above, not a fifth cover of its own.
Louisiana vs Texas: the contrast
Louisiana licenses contractors and mandates cover. Residential, mold-remediation and home-improvement contractors must carry at least $500,000 of general liability under Act 757 (effective 1 August 2026), with proof for at least six months covering all licensed scopes. Commercial contractors have no statutory minimum. Full detail: general liability insurance in Louisiana.
Texas licenses no general contractor and mandates nothing from one. There is no state GL requirement for general contractors, remodelers, roofers or handymen — but licensed trades have statutory minimums (electrical $300,000/$600,000/$300,000 under 16 TAC §73.40), contracts usually demand $1,000,000/$2,000,000, and workers' compensation is optional for private employers but mandatory on public work. Full detail: general liability insurance for Texas contractors.
Common gaps: what insurance does not cover
- Employee injury is not general liability. It is workers' compensation and employers' liability — general liability expressly excludes it.
- Your own property and your own work are not general liability. Damage to your work and damage to your product are excluded from the form.
- Professional mistakes are not general liability. A mistake that only costs a client money is an E&O claim.
- Recall is not product liability. Pulling a product off shelves needs a separate recall endorsement.
- A certificate is not cover. A certificate of insurance is evidence only; it cannot change or add coverage.
How to buy: the SBA's four steps
The Small Business Administration's buying steps, in its order: assess your risks; find a licensed agent; shop around and compare; and re-assess yearly. Get quotes rather than buying on a single median price — and where this site gives a cost figure, it is labelled as an Insureon marketplace median from its small-business customers, never as an official price or a quote.
What this hub does not cover
This hub stays inside its scope: the five guides above. It does not cover workers' compensation state programmes in depth, a business owner's policy in depth, or industry-specific covers — cyber, commercial auto, directors and officers, employment practices liability, commercial property, inland marine and surety bonds. It does not cover other states' contractor rules beyond Louisiana and Texas, home-based business insurance in depth, or any cost calculator: no standalone prices exist to calculate from. For health cover as a self-employed person, see the site's guide to health insurance for self-employed people.
Official sources
For the definitions, see the Small Business Administration, “Get business insurance” SBA — Get business insurance. For the Louisiana minimum, see the Louisiana Legislature, Résumé Digest, Act 757 (SB 326) legis.la.gov — Act 757 résumé digest. For the Texas trade minimums, see 16 TAC §73.40 Cornell LII — 16 Tex. Admin. Code §73.40 and the Texas Department of Insurance TDI — Commercial general liability insurance. Confirm the current rule on those sites before you buy or enroll.
Reviewed by editors Enu Zehra and Ms. Kakka. Owner: Nadeem. Questions: hello@countrypilot.net.
Frequently asked questions
Which small-business cover do I buy first?
General liability first for almost everyone, then workers' compensation — with employers' liability — the moment you hire, then E&O if you sell advice or services, and product liability if you sell a physical product, usually inside the general liability policy.
Is general liability required by law?
Rarely by a general state law. It is usually required by a contract, a landlord, or a licence — Louisiana mandates a $500,000 minimum for residential, mold-remediation and home-improvement contractors, while Texas requires nothing from general contractors at all.
Where do I check my state's rule?
With your state's department of insurance and, for contractors, the state licensing board — the Louisiana Department of Insurance and LSLBC, and the Texas Department of Insurance and TDLR, are linked in the sources on the state pages.
Reviewed by editors Enu Zehra and Ms. Kakka. Owner: Nadeem. Contact: hello@countrypilot.net (email only). General information only — not insurance, legal or financial advice.