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What Types of Insurance Do You Need as a Sole Proprietor?

Feb 25, 2022 · 5 minutes to read

Starting a small business is a big step. It takes hard work, skill, and a good amount of bravery. When you’re working as a sole proprietor, you might need to be even braver than most. The full weight of your business is on your shoulders, and accidents or mistakes could impact more than just your career.

Thankfully, business insurance is there to help protect you in many worst-case scenarios. There are many types of coverage available to small business owners—but what types of insurance should you buy? Let’s take a look at some common coverage options that sole proprietors often consider.

Why do sole proprietors need business insurance?

A sole proprietorship is the simplest business structure. A single person owns and runs the business, which can create some unique risks. There is no difference between the owner and the business, meaning that business liabilities can become personal ones. If something goes wrong, it could affect both your business and personal finances.

This is where business insurance can help. The right coverage helps protect both your business assets and your personal ones.

Which insurance policies do I need?

There are many forms of insurance available to sole proprietors. The policies you might consider will depend on the industry you work in and how you do business.

1. General Liability insurance

Sometimes called “slip and fall” coverage, General Liability insurance is a basic type of coverage that many sole proprietors consider. General Liability protects you from third-party claims of injury or property damage.

If you’re running a business from your home, you may think that this insurance is unnecessary. However, general liability claims can happen just about anywhere and in any work environment. People visiting your home for business purposes—including clients, professionals, and delivery people—could potentially make a claim or file a general liability lawsuit. General Liability coverage also extends to third-party locations where you might meet with clients, such as in their offices, a worksite, or even a local coffee shop.

2. Business Owner’s Policy

Also known as a BOP, this is a convenient insurance package that combines different types of coverages that are commonly purchased by many sole proprietors. A Business Owner’s Policy typically packages General Liability and Property Coverage with some other types of coverage, such as:

  • Business interruption
  • Equipment breakdown
  • Non-owned and hired auto

Your BOP can be customized to include only the types of coverage you need to protect your business.

3. Professional Liability insurance

Also referred to as Errors & Omissions insurance, Professional Liability insurance may be a desirable form of coverage for some sole proprietors. These policies protect your business against omissions or mistakes in your work, breaches of contract, missed deadlines, and other types of professional error.

Professional Liability insurance for sole proprietorship is often considered by professional service providers, including:

Some professions may be required to maintain minimum levels of Professional Liability coverage to work in their field or in their state.

4. Workers’ Compensation

This form of coverage helps protect your business against workplace injuries and serious illnesses. As a sole proprietor, Workers’ Compensation may not be your top priority. Most states don’t require businesses to have it until they have hired their first employee.

However, workers’ compensation rules are different in every state. It’s wise to check your local area’s laws, as you might need a Workers’ Compensation policy even as a sole proprietor. This is sometimes the case for building and construction trades or if you want to bid on government contracts. Even if it’s not required, it still might be a good idea if the risk of injury in your industry is high.

Insurance can help sole proprietors grow their business

Most business owners hope their enterprise will grow and expand over time. Business insurance can help you achieve this goal.

If your first clients or customers are family and friends, they probably won’t ask if you have insurance before hiring you. However, as you take on bigger clients, you’ll probably need to provide proof of insurance before they’ll even consider hiring you. Many businesses expect the businesses they work with to have minimum levels of coverage, even if they are a sole proprietor.

Furthermore, commercial landlords typically require General Liability coverage to lease their property. Business insurance does more than just protect your wallet and assets, it also shows that you are a professional and prepared for anything that comes your way.

Ready to protect your small business? It’s quick and easy to compare multiple forms of coverage with BizInsure, including Professional Liability insurance for sole proprietorship.

Get quotes now and start protecting your small business today!

*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.

Let's find

The coverage you need for your business

Professional Liability Insurance

Professional Liability Insurance

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General Liability Insurance

General Liability Insurance

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Business Owner’s Policy (BOP)

Business Owner’s Policy (BOP)

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Workers Compensation Insurance

Workers Compensation Insurance

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Let's find

The coverage you need for your business

Professional Liability Insurance

Professional Liability Insurance

Get a quote

General Liability Insurance

General Liability Insurance

Get a quote

Business Owner’s Policy (BOP)

Business Owner’s Policy (BOP)

Get a quote

Workers Compensation Insurance

Workers Compensation Insurance

Get a quote

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