Ah, getting business insurance. Like going to the dentist or registering to vote; it’s one of those things you know you should do — the problem is, it’s not always clear how to do it.
We get it. So we’re here to help outline the process for how to get business insurance for your sole proprietorship. And we’ve made the process easy to understand, because we know you have a lot on your plate.
So whether you’re just starting out or a client wants to see proof of insurance, our step-by-step guide will explain the process for getting sole proprietorship insurance.
Good news: Business insurance can be customized to your business’s needs. Not-so-good news: It’s easy to get the wrong coverage if you don’t know what your business actually needs.
So before you start shopping for insurance coverage for your sole proprietorship, it’s a good idea to know what you need to have covered. That way, it can be easier to find the right insurance policy when you’re finally ready to buy (more on that in a bit).
So how do you figure out what should be covered? Ask yourself the following questions to determine what should be covered by your policy:
Those are just a few starting questions, but the answers can help give you a better sense of where your risks may be, and what type of sole proprietorship insurance you may need.
(Psst…want to make it easy on yourself? Our free quote comparison tool can provide recommended policy options based on questions about your business. And it usually takes less than 10 minutes to answer them!)
We’re going to dive into some insurance-speak for a minute here, but don’t worry — we’ll make it as painless as possible.
There are a few main policy types you’ll come across while shopping for business insurance. Some of these may include:
A general liability insurance policy typically covers costs associated with third-party accidents, property damage, and bodily injury.
Say you’re working at a client’s house and you accidentally damage their property (or they claim you did); your general liability policy could cover costs to repair damages, plus pay for a lawyer if the client sues you (up to your policy limit).
General liability (GL) insurance is considered a foundational policy for most small business owners, especially those who work directly with clients and vendors. Additionally, many states require certain business types to have proof of GL insurance, including contractors. You can find information about your state’s requirements here.
A professional liability insurance policy can cover you (and your business’s employees) if a client claims that your work or services resulted in financial damage.
For example, let’s say you’re a graphic designer. You created a large presentation for your client that, unfortunately, failed to work with their existing presentation software. As a result, your client has to scramble to create a last-minute presentation that ends up not impressing their potential new clients.
Unfortunately, the client could sue you for damages, claiming your negligence resulted in their losing business. That’s where your PL policy could come into play, as it would cover the costs of defending yourself from a lawsuit, plus damages you’re ordered to pay (up to your policy limit).
If you have employees — whether they’re part-time or full-time — your state may require you to get workers compensation insurance.
This type of policy provides coverage in an event where your employee gets sick or injured as a result of their work on the job. Workers comp can typically pay for medical bills, rehabilitation, and even death benefits should the worst happen.
Even if you don’t currently have employees, it’s a good idea to begin thinking about this coverage in the event your business grows!
We get it — budgets may not be the most fun to make, but as a sole proprietor, it helps to know what you’re able to spend.
That’s why we recommend outlining how much you can likely spend on business insurance. You can choose to break it down annually, or monthly if you want to spread the cost out a bit more.
Once you have a good idea of your budget, it’s time to start searching for the perfect policy.
As with any large purchase, don’t just settle on the first policy you see. Instead, try to get multiple quotes from insurers so you know what options are available. After all, some insurers may offer lower prices than others, because they specialize in covering your type of work.
Speaking of work, comparing multiple quotes from several insurers is no walk in the park. You’ve only got so much time in the day, and let’s face it, spending your free time trying to buy insurance may not be the most thrilling experience.
That’s where we come in.
Simply Business is an online business insurance platform that makes it easy to compare quotes from the nation’s top insurers — all at once. Just answer a few simple questions using our quote comparison tool, then sit back and relax as we deliver affordable quote options directly to you.
Best of all? It can take less than 10 minutes to find the right policy for your business.
And with policies starting at just $22.50/month,* it’s no wonder that more sole proprietors get their business insurance through Simply Business.
If this is the first time you’re shopping for business insurance, it’s safe to say that the process can feel a little intimidating.
After all, you want to ensure that you’re getting the right policy, but sometimes, insurance-speak can make it difficult to actually understand what you’re getting.
That’s why it may be a good idea to reach out to other business owners who have been in your shoes. For example, if you’re starting an Etsy store and not sure what type of insurance coverage you need, consider reaching out to other Etsy owners who are insured.
Just keep in mind that insurance isn’t a one-size-fits-all solution. While a policy may be great for one sole proprietor, it doesn’t necessarily mean that the same will work for you.
That’s because your recommended coverage is usually based on:
Ultimately, asking for advice can help set expectations for what you may come across when shopping for insurance. And who knows — another business owner may even clue you in on getting a useful policy you didn’t even know existed!
No one knows better than we do that business insurance can feel complicated.
That’s why we’re dedicated to breaking down insurance-speak and hard-to-understand lingo so you feel confident and empowered during your insurance shopping session.
Got more questions? Give one of our friendly US-based insurance agents a call; they’ll be happy to help you find the right business insurance for your sole proprietorship. You can reach them (and us!) at 844-654-7272.
Need more advice on how to start and grow your sole proprietorship? We can help there, too. Check out the rest of our blog, Simply U — it’s chock full of posts on everything small business owners need to be successful.
Best of luck with your business. We’re rooting for you!
* Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on January - December 2020 data of 10% of our total policies sold.
I love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!
Mariah writes on a number of topics such as small business planning, contractor insurance, and business licenses.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.