Businesses in Connecticut require business insurance for the following reasons:


  • The United States’ Small Business Administration (SBA) states that by law, businesses with employees are required to offer certain types of insurance (e.g. unemployment and workers’ compensation and disability).
  • Businesses need to take out liability insurance in the event a lawsuit against them is lodged (e.g. an employee taking a legal action)
  • Natural disasters can devastate a business, causing it to lose money during the time the business is closed for repairs (e.g. thunderstorms, snowstorms, flash floods, tornadoes, and hurricanes).
  • Obtaining business insurance increases your business’s credibility among clients and customers (e.g. home service businesses earn their customers’ trust by stating they are “Licensed, Bonded, and Insured.”).
  • Businesses should take out workers’ disability insurance for their employees in the event of an on-site accident (e.g. if an employee sues, your business will be protected against liability claims and lawsuits).
  • Business Owners Insurance (BOP) protects your business against unexpected and unanticipated loss of income (e.g. the insurance company pays the money your business would have made if it was open, as well as covers normal operation costs such as utilities and rent).
  • Business owners should consider taking out key man or key person insurance in the event something happens to them or to a valued employee (e.g. in the event of a serious accident, this insurance policy would compensate for the loss of income).
  • Business insurance attracts and retains employees (e.g. an employee offered life and health insurance is more likely to remain with the company).
  • Business insurance can be part of a contract (e.g. you require insurance coverage if you rent or lease your building, you need to borrow money to finance operations, equipment, and buildings, your clients require you have it as a part of the contract, or you are a freelancer) .

11 Types of Business Insurance You Can Apply for in Connecticut

One of the most important reasons you need business insurance is the unpredictability of today’s dynamic marketplace. You never know when an employee might meet with an accident at work, when a natural disaster may come knocking at your door, or when your business might suffer a huge loss, causing you to lose a large sum of money.

To help you overcome difficult situations you did not ask to find yourself in, here are 11 types of business insurance you can apply for in Connecticut:

Business Owners Policy (BOP)

Business Owners Policy or BOP combines two types of insurance — business liability and business property — into one neat little package. BOP protects your business from various claims made against it. The claims include theft, fire, personal injury, bodily injury, advertising injury, or property damage.

Workers’ Compensation Insurance

Businesses need to offer workers’ compensation insurance coverage, which covers two types of coverage — provides benefits to employees who sustain an on-site injury or contract an illness or disease related to the work they do and employer’s liability, which covers any lawsuits filed against the business by an employee due to an on-site accident or illness.

General Liability Insurance

Businesses should not neglect getting general liability insurance because of the benefits associated with it that include coverage for property damage, advertising injury, personal injury, and negligence.

Farm Insurance

Connecticut is home to more than 5,000 farms. Therefore, it is important for farmers to insure their farm. Farm insurance protects their personal property in the house such as clothes, appliances and furniture, liability coverage, and personal property on the farm such as farming tools, equipment, grain, and livestock.

Auto Dealers Insurance

If you operate an auto dealership, you have a lot of assets to protect, both displayed in the showroom and outside. In the event of vandalism or theft, you can afford to lose a lot. Therefore, having auto dealers insurance is crucial.

It is important to ensure your insurance coverage covers liability insurance. If a customer makes a claim against the car they bought from your auto dealership, liability insurance will serve as a shield for your business. When taking out auto dealer insurance, ensure that the policy includes “Consumer Complaints,” “Theft and Damage,” “Personal Injury,” and “Errors and Omissions.”

Group Health Insurance

Group health insurance saves businesses money and helps them retain their employees, as it provides them with better access to healthcare.

Liquor Liability Insurance

Businesses that sell, manufacture, and serve alcohol should obtain liquor liability insurance. This type of insurance will protect the business from damage and loss that can result if a customer becomes intoxicated and injures others or themselves.

Contractors Insurance

Contractors insurance protects you against liability. Your occupation as a contractor exposes you to dangerous situations that can cause injury. Purchasing contractors insurance protects you from potential lawsuits and structural damage.

Commercial Auto Insurance

If your business operations include operating a fleet of delivery trucks, vans, or a single vehicle, you should take out commercial auto insurance. This type of insurance will come in handy if one of your trucks meets with an accident on the road or if your employees becomes injured on the job. The insurance covers medical expenses as well as cost of repairs.

Lawyers Professional Liability Insurance

Attorneys and law firms should take out lawyers professional liability insurance to protect them against malpractice lawsuits. Attorneys and law firms dealing with an ongoing lawsuit against them can still take on cases to keep their practice going.

Restaurant Insurance

Restaurant insurance can include a combination of different insurance coverage such as workers’ compensation, food contamination, general liability, and liquor liability insurance.

Insurance companies can offer businesses applying for business insurance with a customized insurance plan, tailored to their business needs and requirements. Their business insurance can include coverage for multiple things.

The 5 Unforeseen Risks Businesses in Connecticut Face and Solutions to Mitigate Them

Business owners in Connecticut need to insure their business as an unforeseen risk can sink their business and cause them to lose revenue. Here are the unforeseen risks business in Connecticut face and the solutions they can apply to mitigate them:

Unforeseen Property Damage

Property damage can cost you a lot of business, especially if you need to close your business for a few weeks, months, or even a year, depending on the extent of property damage.

Solution:  Business owners needs to invest in Business Owners Policy (BOP). BOP offers coverage for damaged business assets in the event of a storm, fire, flood, or other disasters. Whether businesses own or rent the building for work purposes, they are still eligible for BOP.


Unforeseen Work-related Injuries

You cannot predict when an employee might sustain an injury at work or develop a work-related illness, both which require medical treatment and cost you money as it puts the employee out of action and hinders productivity.

Solution:  Apart from taking out workers’ compensation insurance, business owners should take measures to hold workshops to educate their workers about practicing workplace safety. By educating employees, businesses can minimize the chances of an injury or accident occurring on-site.

In the event an employee sustains an injury or becomes sick due to their work, the workers’ compensation insurance will provide them with medical benefits and wage replacement. This type of insurance benefits businesses because it prevents employees from taking a legal action against the business.


Unforeseen Disasters

Fires, water damage, natural disasters, among other unforeseen events put businesses in a vulnerable situation. They put you at risk of closing down your business or being forced to find a new location to relocate it.

Solution:  Businesses require insurance coverage that protects them against natural disasters and other unpredictable events such as fires and water damage that can lead to structural damage. Insurance coverage will compensate for the loss of income and operating costs, thus allowing business owners to maintain employee payroll and stay on track to repair damage and replace damaged equipment. In most cases, this type of coverage reimburses a business for a year of loss of income.


Unforeseen Lawsuits

If your business is at risk of lawsuits being filed for libel, accidental injury, slander, and other unforeseen circumstances, you need to invest in a business insurance policy.

Solution:  The best way to fight lawsuits is to obtain liability insurance. Since businesses do not know when a lawsuit against their company, service, or product may be filed, it is important for them to obtain liability coverage.


Unforeseen Security Breach

Security breaches occur in businesses that have sensitive data such as customer information stored on their computers. Hackers can breach security and leak data to a third party, your competitor, or leak it online for all the world to see.

Solution:  Business owners need to protect their sensitive data by investing in an insurance called data compromise and identity recovery insurance. This type of insurance protects businesses against damage or loss of data storage devices, computer equipment, software damage, electronic information, and costs associated with recovering data.

Umbrella Liability Insurance Policy— The Most Effective Way to Mitigate Unforeseen Risks in Connecticut

Umbrella liability insurance policy protects businesses against huge losses. The purpose of an umbrella liability insurance policy is:

  • Offer additional limits to business owners when the restrictions of basic liability policies are consumed by the payment of claims
  • Offer additional protection against certain claims that basic liability policies do not cover
  • Begin where the basic liability policy ends when the combined limit of the basic liability policy in consideration is consumed by the payment of claims

How Businesses Will Benefit from Commercial Umbrella Liability Insurance Policy

Commercial Umbrella Liability Insurance Policy provides businesses with additional liability coverage, covering the most costly lawsuits.

For instance, a business is fighting a lawsuit filed against them. Their general liability insurance policy to cover the expenses, resulting from the lawsuit, runs out, but they still need to pay money for the damages.

To cover where their original policy left off, the commercial umbrella liability insurance policy comes into play, offering them extra capital to make up for the difference.


The Types of Insurance Coverage the Commercial Umbrella Liability Insurance Policy Supplements For

  • Workers’ Compensation Insurance
  • Employer’s Liability Insurance
  • General Liability Insurance
  • Commercial Auto Liability Insurance

As a requirement put in place by most insurance companies before they offer businesses with the commercial umbrella liability insurance is that they must meet the minimum policy limits on the aforementioned policies.

For instance, a business in order to obtain the commercial umbrella liability insurance may be required by the insurance company to obtain a general liability insurance policy with a $1 or $2 million limit.


Understanding How Commercial Umbrella Liability Insurance Works

Commercial umbrella liability insurance is for businesses that require additional protection. Here’s how the commercial umbrella liability insurance works:

  1. Your general liability insurance policy has a $1.5 million limit
  2. In case of a lawsuit, $1.5 million will go towards paying for legal defense and related costs
  3. An employee trips and falls
  4. You owe $2 million in damages and legal fees
  5. You have surpassed your initial limit covered by the general liability insurance policy
  6. Now, you owe $500,000 more
  7. If you have taken out the commercial umbrella liability insurance, it will cover the additional amount you owe


When Can You Make a Claim on a Commercial Umbrella Liability Insurance?

You can make a claim on a commercial umbrella liability insurance when someone sues your business over customer damages and injuries and employee injuries that your Workers’ Compensation Insurance Policy does not cover.

You can also make a claim on a commercial umbrella liability insurance when the expenses of the lawsuit surpass the limit of the established limit on your insurance policy created to cover the legal expenses.


Here are some of the expenses a commercial umbrella liability insurance can provide additional coverage for:

  • Workers’ Compensation lawsuits
  • Third party lawsuits over property damage
  • Slip and fall injuries

Here are some of the expenses a commercial umbrella liability insurance does not provide additional coverage for:

  • Malpractice lawsuits
  • Employee discrimination lawsuits
  • Professional liability lawsuits
  • Property damage


Does Your Business Require Commercial Umbrella Liability Insurance?

Your business requires commercial umbrella liability insurance if the following if true for your business:

  • You are on a budget
  • You want to bring on board a big client who needs additional liability insurance coverage
  • Your business attracts a lot of foot traffic
  • You are concerned about the exclusions in the other liability insurance policies you have taken out

If you want to mitigate business-related risks, now, you know the type of business insurance you should take out to protect your business.

Article by:

Brandon Dendas



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