If you’re a business owner, you have a responsibility to look out for your employees and the bottom line. One way to make sure both of those needs are met is to ensure that you have the right kind of business insurance.

Business insurance protects your company from financial hardship should disaster occur, such as:

  • Your business could experience property damage from a fire.
  • A customer could slip and fall on your business’s property and sue your company.
  • An employee could have an accident while on the job and demand payment for lost wages.

If one of those events or another unexpected calamity were to happen, would your business be able to survive? Business insurance keeps you from having to answer that difficult question.

While it may be easy to see why business insurance could be helpful, it may be more difficult to determine what type of business insurance you need. Some insurance coverage is geared toward certain types of businesses. For example, key employee insurance provides compensation to a business if a key member of the staff is injured or dies. Say you have a salesperson that’s responsible for more than half of your company’s business. If that person were to die, there’s a chance that many of your company’s clients would take their business elsewhere. Key employee insurance could provide you with financial resources to sustain the loss of that top salesperson. If your business is primarily made up of entry level employees you may not need such a policy. While it’s always wise to discuss your options with an insurance agent or broker, here are five types of coverage that every business owner should consider.

Property damage coverage. If your business is destroyed by a tornado or some other type of disaster, not only would you no longer have a place to do business, but you’d possibly lose equipment, inventory and other important possessions. Property damage coverage makes sure you have the money you need to rebuild, as well as the funds necessary to replace any items that were lost.

Liability insurance. If you think you’re not in danger of being sued, consider this: American small businesses collectively spent more than $105 billion on lawsuits in 2008 alone, according to the Institute for Legal Reform. A customer could claim that a product caused him harm, and then decide to sue the business. Another customer could say that your business’ slippery floor made her fall. Liability insurance can provide money for damages, attorneys’ fees and even medical bills if your business is found liable.

Business auto insurance. Just as you need car insurance to pay for damages if you cause an accident in your personal life, you might need business auto insurance to provide coverage for any vehicles owned by your business. Business auto insurance would pay for damages or injuries caused by you or your employees when they were driving on company time.

Workers’ compensation insurance. If an employee gets hurt while on the job, your business could be found liable for damages, as well as lost wages if the employee cannot work due to injury. Workers’ compensation insurance will pay for medical bills, as well as lost wages – typically a percentage of the employee’s salary — in this scenario regardless of who ultimately turns out to be at fault. While many types of business insurance are optional, this may not be one of them, depending upon how big your company is and where you live. According to the Insurance Information Institute, employers in all states except Texas must have workers’ compensation insurance when they have a state-specified minimum number of employees, ranging from three to five.

An umbrella policy. If you work from home, don’t make the mistake of thinking that your home insurance policy will cover all of your business losses, says Lolita Scesnaviciute Guarin, author of “Be Insurance Savvy: Home, Auto, Dwelling, Renter’s, Flood and other Personal Insurance Explained.”

While you may not need a business liability or property damage policy, consider buying an umbrella policy, which provides coverage beyond your standard home insurance policy. You can also buy an umbrella policy that will provide coverage beyond a standard business liability policy.