Sole Proprietorship Insurance

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?

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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 Insurance as a Sole Proprietorship?

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 Business Insurance Do I Need as a Sole Proprietor?

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 Insurance for My Sole Proprietorship?

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

• Is sole proprietorship insurance required by law?

  The answer depends on the state you’re located in, as some states require sole proprietors to have insurance in order to get a business license.

  Additionally, depending on the type of work you do or services you provide, your state may require you to have general liability insurance, professional liability insurance, or both.

• Is sole proprietorship insurance tax-deductible?

  You can typically deduct your insurance premiums when filing taxes for your sole proprietorship. If you have any questions about your business’s tax deductions, we recommend talking to an accountant or tax preparation specialist.

• How much sole proprietorship liability insurance will I need?

  Every solo business is different, which is why your coverage is usually tailored to:

  • The size of your business
  • Your business’s location
  • Your annual revenue
  • The specific services you provide
  • And more

  Our quote form helps us determine your recommended amounts of coverage from the nation’s top insurers. What’s more, you can compare those quotes for absolutely free, meaning there’s no obligation to find the policy that works best for your business.

  If you have more questions, our licensed insurance agents are available to assist you!

• What should I consider before buying sole proprietorship insurance?

  We know time is precious - after all, you’re working solo.

  That’s why, to get your free sole proprietorship insurance quotes in under 10 minutes, we recommend having the following on hand:

  • Annual revenue estimates
  • Information on any previous claims
• Does insurance for sole proprietors differ by state?

  Insurance requirements differ from state to state, depending on the type of work you do. We can help you by providing you with recommended coverage options based on your business’s location.

• What does sole proprietorship insurance cover?

  A comprehensive insurance product for sole proprietors — one that includes general liability and professional liability policies — can cover:

  • Bodily injury
  • Accidents and damages
  • Unintentional mistakes
  • And more

  At Simply Business, we can help you tailor your sole proprietorship insurance to cover your specific needs.

  So whether you need just a GL policy or want both GL and PL insurance, we have the policies you need to protect your business.

• How much does sole proprietorship insurance cost?

  It can be tough to give a single answer, as sole proprietorship insurance is highly customized to a business’s specific needs.

  Here at Simply Business, we typically base your sole proprietorship business insurance cost on:

  • Your business’s location
  • The services you provide
  • Your estimated annual revenue
  • And more

  Want to find out how much your sole proprietorship business insurance might cost?

  Just answer a few questions and we can show you free quotes from the country’s top providers of sole proprietorship insurance!

• What if I perform multiple activities as a sole proprietor?

  If you provide several services as a sole proprietor, our licensed agents can help you find the insurance coverage that can offer robust protection.

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.

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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.