Can you get business insurance as a sole proprietor? If you are a sole proprietor, business insurance, such as general liability insurance, commercial auto insurance, and business owner’s policy, can protect both your business and your assets from lawsuits and other risks. You can probably get the policies you need online in minutes.
As a sole proprietor, you may think you don’t need business insurance because you don’t have employees or a store. However, regardless of the size of your business, there are still risks associated with operating as a sole proprietor, and having the right insurance can provide essential protection.
In this blog post, we’ll cover everything you need to know about getting business insurance as a sole proprietor, including the types of insurance available, why it’s important, and how to get it.
What is a sole proprietorship?
Because it is owned by one person, a sole proprietorship is one of the easiest types of businesses for emerging entrepreneurs to establish. As a result, it is one of the most popular types of businesses in the United States, with over 25 million registered businesses as sole proprietors.
Unlike corporations and LLCs, sole proprietorships do not protect their owners, known as sole proprietors, from their business debts, taxes, and legal obligations. Sole proprietorships are less expensive to establish, but also riskier to operate, increasing the need for small business insurance.
Can You Get Business Insurance As A Sole Proprietor – Do Sole Proprietorships Need Business Insurance?
Can you get business insurance as a sole proprietor? Sole proprietorships must at least be insured for general liability. This coverage protects you if someone files a lawsuit accusing you of damaging your property, injuring you, or harming your reputation. As a sole proprietor, a lawsuit can jeopardize your assets, not just your business finances.
Why do you need business insurance as a sole proprietorship?
As a sole proprietor, you are responsible for all aspects of your business, including any liabilities. For example, if a customer sues you for negligence, you could be held personally liable for any damages. Similarly, if you accidentally damage a customer’s property while on the job, you may be responsible for the cost of repair or replacement.
Having business insurance as a sole proprietor can help protect you against financial loss due to liability claims, property damage, and other risks associated with running a business. It can also help you maintain your professional reputation and avoid bankruptcy in the event of a lawsuit or other costly event.
Types Of Business Insurance For Sole Proprietorships
As a sole proprietor, you may need several types of insurance to adequately protect your business. Here are the most common types of business insurance for sole proprietorships:
- General Liability Insurance – This type of insurance provides coverage for bodily injury, property damage, and claims for personal injuries, such as libel or defamation.
- Professional Liability Insurance – Also known as error and omission (E&O) insurance, this type of insurance provides coverage for claims resulting from negligence, errors, or omissions in the services you provide.
- Business Property Insurance – This type of insurance provides coverage for physical damage to business property, including equipment, inventory, and other assets.
- Business Interruption Insurance – This type of insurance provides coverage for loss of income and other expenses if the business is interrupted due to a covered event, such as a fire or natural disaster.
The Best Business Insurance For Sole Proprietorships – Can You Get Business Insurance As A Sole Proprietor
The best business insurance companies for sole proprietors make it easy to quickly get the coverage you need.
Next: Best General Insurance Company For Sole Proprietors
Next explain what policies you need based on the industry you’re in and how you’ll answer questions during the quote process. The company also sells the most common types of business insurance online, including general liability insurance, professional liability insurance, and commercial vehicle insurance. So whether you need insurance for your cleaning business, personal trainer insurance, or something else, Next could be a good fit.
Chubb: Best General Liability Insurance for Sole Proprietors
Chubb received fewer complaints about general liability insurance relative to its market share than any other commercial insurance company we have evaluated. You can purchase general liability insurance from Chubb online if your business earns $1 million or less in annual sales. Chubb also offers a business owner’s policy, professional indemnity insurance, and cybersecurity insurance online.
Thimble: Best for temporary coverage
If an event or job contract requires you to have commercial insurance, Thimble offers insurance policies for one month at a time or for a specific job. This can help you save money because you don’t have to pay ongoing premiums. Thimble offers general liability, professional liability, and business property insurance, but not commercial auto insurance.
The Hartford: Best Business Owners Policy for Sole Proprietors
You can add data breach insurance and professional liability insurance to your Hartford business owner’s policy, making it a good option for small business owners who don’t want to manage multiple policies. Some business owners can purchase a policy online, or The Hartford can put you in touch with an associate to complete your purchase.
Allstate: Best for commercial auto insurance
You can get a commercial auto insurance quote online from Allstate, which is one of the top 10 commercial auto insurance providers in the US, according to the Insurance Information Institute. You can also get a business owner’s policy and other coverage directly from Allstate.
How To Take Out Business Insurance As A Sole Trader
Follow these steps to purchase business insurance as a sole proprietor:
- Assess Your Insurance Needs – Determine what types of insurance you need based on your specific business activities and risks.
- Research Insurance Providers – Look for insurance companies that specialize in providing coverage for sole proprietorships.
- Get quotes – Contact multiple insurance companies to get quotes for the coverage you need. Give them as much information as you can about your business, including your income, the industry, and any specific risks associated with your business.
- Compare quotes and coverage – Once you’ve received multiple quotes, you can compare them to determine which provider offers the best coverage at the most affordable price.
- Buy insurance: Once you select an insurance company, review the policy details carefully and make sure you understand the coverage and exclusions. If everything looks good, sign the policy and pay the premium to activate the cover.
When comparing quotes, consider things like:
- Policy Coverage – Business insurance policies are often quite similar from provider to provider. But look closely at the exclusions, additional coverages, and approvals in case there are significant differences.
- Limits of Liability: The limit per event is the maximum the insurance company will pay for each claim and the total limit is the maximum amount the company will pay during the term of the policy. Larger or riskier companies may require a higher limit.
- Price: Compare policy premiums and deductibles, which is the amount you’ll have to pay out of pocket before your insurance starts. Lower premiums often come with higher deductibles, meaning you pay less each month, but more in the event of a claim.
After purchasing your insurance policies, make sure you understand when your payments are due and how to manage your coverage, including how to file a claim, add endorsements, or obtain a certificate of liability insurance.
Re-evaluate your business insurance policies annually. When you’re about to renew your policies, think about how you’ll find the coverage, costs, and customer service you’ll get, as well as the new risks you’ll face. This way you can be sure that you always have the right coverage for your company.
Final Thoughts – Can You Get Business Insurance As A Sole Proprietor
Can you get business insurance as a sole proprietor? As a sole proprietorship, it is essential to have the right insurance to protect your business against unexpected risks. By evaluating your insurance needs, researching insurance providers, getting quotes, and buying the right coverage, you can ensure your business is protected and you can continue to operate with confidence. Remember to keep your insurance coverage up to date and notify your insurance company of any changes in your business that may affect your coverage.
