Sole Proprietorship Insurance: Protection While You’re Working Solo

As a sole proprietor, you’re used to doing things on your own. From dealing with customers to tracking every expense, you’ve built a successful business by yourself — and you like it that way.

But there’s one thing you shouldn’t do on your own: manage all the potential risks that you’re exposed to as a sole proprietor.

That’s where we come in.

Here at Simply Business, we work with insurers to provide business insurance options for sole proprietors like you. From general liability coverage to professional liability insurance, our policy options are tailored to cover the biggest risks you may face in your business.

Best of all? We make it easy to get insured, because let’s face it — you’ve got enough on your plate. Simply complete our online form to compare free sole proprietor business insurance quotes in less than 10 minutes.

Ready to get covered?

Policies Available for Sole Proprietorship Insurance:

• General liability insurance
• Professional liability insurance

Benefits:

• It can protect your business from certain claims.
• It can cover damages caused by your negligence.
• Proof of insurance can help customers feel good about your work.
• It may be legally required where you’re located.

What are 4 Disadvantages of a Sole Proprietorship?

While it’s an easy business structure to set up, sole proprietorships have some disadvantages when it comes to liability and risk.

1. You may enjoy having complete control over your business. However, the downside is that all accountability falls on your shoulders.
2. Investors won’t usually invest in your sole proprietoships. If you need money to stay in business, it may be difficult to raise funds or secure a loan.
3. As a sole owner, there is no separation between your personal assets and your business assets. If someone sues your business, they can take away your car, home, or personal cash.
4. Additionally, you can be held fully responsible for the wrongdoings of anyone employed at your business.

Do I Need Sole Proprietorship Insurance?

Having insurance is a smart business move for many sole proprietors. Insurance coverage can provide protection against damaged property, lost wages, and lawsuits.

While you may be a small operation, your personal assets are at risk if your business is sued. That’s why it’s so crucial to protect yourself with the right types of insurance.

What Type of Sole Proprietor Business Insurance Do I Need?

If you’re a sole proprietor, the type of business insurance coverage you may need depends on the type of services you provide.

For example, if you’re a general contractor, you may need general liability insurance. If you’re an accountant with a home office, you may need both professional liability and general liability insurance policies.

How Do You Protect Yourself as a Sole Proprietorship?

Great question! And we’re here to help! Take a look at the most common business insurance policies for sole proprietorships:

General Liability Insurance

General liability insurance for sole proprietors provides coverage against costs associated with third-party accidents, property damage, and bodily injury to third parties, like customers or vendors.

So what does that mean?

Let’s say you have a pressure washing business. You’re turning on the hose to wash the home’s siding, and the water comes out with more pressure than you anticipated. So much, in fact, that it ends up knocking a shutter off the customer’s window.

Or say you’re a private tutor with a home office space where your students come to have their lessons. One day, one of your students trips over a loose rug in your office and gets badly hurt. The student is rushed to the emergency room, where the X-rays show a broken wrist.

In both cases, you could be held liable; the first example for the property damage you caused, and the second example for the student’s medical expenses. That liability could potentially mean paying out a lot of money to cover the damages.

And that dollar amount could exponentially increase if a customer sues you.

Fortunately, with general liability insurance, you’d get help paying those bills, plus any legal fees and related lawsuits (up to your policy limit).

General liability insurance can usually cover:

• Bodily injury to another person (like a customer)
• Third-party property damage
• Personal and advertising injury
• Medical expenses
• And more

Here’s what general liability insurance usually doesn’t cover:

• Damage to your own property
• Professional services
• Damage to your work
• Motor vehicles while in business use
• Expected or intentional injury or damage
• And more

Professional Liability Insurance

If you’re a sole proprietor who specializes in providing services to a client (like accounting, website design, photography, etc.), you likely need professional liability insurance.

This insurance policy is designed to protect you from claims of negligence related to your work.

Say, for example, you entered the wrong number on her tax return and, as a result, she gets audited by the IRS. Your PL policy could likely cover some or all of the costs related to that claim.

Professional liability can be critical protection for sole proprietors, precisely because you operate a solo business. With so much on your plate, you might make a mistake with a client’s project, even though you don’t intend to.

After all, you’re only human!

That’s exactly where professional liability insurance comes in. Depending on your policy limit, it may be able to pay for financial damages resulting from your negligence. Your policy can even cover a lawyer’s fee to defend you from a negligence lawsuit.

To recap, professional liability insurance usually covers:

• Negligence or alleged negligence
• Legal defense costs
• Omissions or alleged omissions
• Copyright infringement
• Claims and damages
• And more

Professional liability insurance usually doesn’t cover:

• Intentional acts and omissions
• Property damage
• Medical expenses
• Bodily injury
• False advertising
• Employment matters
• Patents and trade secrets
• And more

Why Should I Get Sole Proprietorship Insurance?

When you’re running a business, you don’t set out to make mistakes.

But mistakes do happen. And they tend to happen when someone has a lot on their plate and is trying to manage everything without help.

We get it: It’s rewarding to be the only one responsible for your business’s success. But there’s risk there, too. If you’re having an off day or feeling tired, you could make the kind of mistake that might cost you a bundle.

Who is Liable in a Sole Proprietorship?

As the sole owner of your business, you are personally liable for your mistakes. And it’s likely you can’t afford to carry that burden.

That’s why it’s so important to have sole proprietorship insurance. This coverage can help protect you when you make a mistake, or if a customer hurts themselves while visiting you at your office.

Additionally, liability insurance can protect you even if you don’t make a mistake. We live in a litigious society; in fact, it’s estimated that 43% of small business owners have reported being threatened with or involved in a civil lawsuit.

That means the odds are good that a customer could sue you, even if you didn’t make a mistake or cause any damage!

You can’t control all of the risks that come with running a business. But with insurance from Simply Business, you can make sure those risks don’t ruin your hard work.

Sole Proprietorship Insurance FAQs

Why Choose Simply Business?

Simply Business is an online insurance platform that makes it easy for sole proprietors to compare and buy a business insurance policy from trusted insurers.

We’re also one of the fastest-growing online providers of insurance for small business owners, with thousands of customers trusting us to protect their growing businesses.

So why choose Simply Business? It’s, well, simple:

• We’re fast and affordable. You have better things to focus on, like running your business. Our policies are fast, affordable, and ready when you are.

• We’re not complicated. We’re here to make insurance clear, simple, and a lot easier to understand. So you can feel more confident about what you’re buying.

• We get your business. Forget one-size-fits-all insurance. Get the protection you need as a sole proprietor, without overpaying for coverage you don’t need.

You’ve worked hard to build your business without any help. That’s why we offer the best coverage to protect you.

This content is intended to be used for informational purposes only. It is not intended to provide legal, tax, accounting, investment, or any other form of professional advice.