Business insurance. It’s something that you may know you need to have, but for some reason, you just can’t seem to find the time to get it.
Maybe it’s because you’re too busy; after all, running your own business can feel like a 24/7 gig.
Or maybe you’re not 100% convinced of the value of business insurance. Why do you need it if your business is made up of just you? Does having it justify the time and effort you have to put into getting it?
As it turns out, having business insurance isn’t just a good idea; it also can provide significant — and surprising! — benefits to your business.
Sit back, relax, and get ready to learn more about the four biggest benefits of sole proprietorship insurance.
Whether you’re a general contractor or an accountant, part of your job may involve convincing potential clients to choose you for a project or gig. In these cases, having business insurance can come in handy.
Here’s why: Carrying proof of business insurance (also known as a certificate of insurance or ‘COI’), can show clients that you’re serious about the work you do. That’s because there’s a layer of trustworthiness and security that might not otherwise be there if you were uninsured.
Plus, it can help build significant peace of mind for clients who want to know that you’ll have their back if something goes wrong.
For example, if you accidentally cause property damage in a client’s home, your business insurance policy could pay to have that property repaired or replaced.
Without insurance, your client would have to either pay for that damage themselves and sue you to recoup their money, or demand that you pay for it out of your own pocket (which could also involve a lawsuit).
A lot of sole proprietors are surprised to learn that business insurance can come in handy if a lawsuit ever crops up.
Unfortunately, it's not just big companies that are involved in lawsuits. A study estimated that small businesses make up anywhere from 36-53% of the businesses sued each year.
And you don’t always have to do something wrong to end up in court. A client could sue you for something you didn’t do, or claim that you were negligent or caused damage through your work.
Even if you have proof against the client’s claim, you still may need to hire a lawyer to defend you in court (and that may end up being very expensive).
That’s where sole proprietorship insurance comes in handy. Depending on your type of coverage, your policy can cover attorney fees, plus any claims you’re ordered to pay (more on those instances in a bit).
That means if you get sued, the only money coming out of your pocket is likely to be your business insurance deductible. And with many policies offering a $0 deductible, it’s not surprising to see why many sole proprietors opt to have business insurance as a safeguard against a financial catastrophe.
Business insurance isn’t a one-size-fits-all policy; in fact, there are multiple coverage types that can protect all elements of your business.
For example, some coverage types include:
General Liability Insurance: This policy can help pay for any third-party property damage or accidents caused by you or your employees. General liability insurance is a foundational policy for covering sole proprietorship liability, especially for those who work on client properties.
Plus, proof of GL insurance is often required by states, especially if you work in the contractor/construction industry. Check out our state-based contractor licensing hub to learn more.
Professional Liability Insurance: This policy covers you and your employees if you’re accused of negligence while performing your work. Professional liability is typically crucial for sole proprietors who work in advice-driven industries, such as accounting, real estate, consulting, tax prep, and more.
Learn more about professional liability insurance, including how to tell if you may need this coverage.
Tools & Equipment Insurance: This type of policy — which is often bundled with general liability insurance — covers your tools and equipment in case they’re damaged or stolen while on the job. FYI, tools & equipment insurance may also be referred to as “inland marine insurance.”
We offer tools & equipment coverage as an add-on to some of our general liability policies.
Workers Compensation Insurance: This policy offers financial coverage in the event one or more of your employees get sick or injured on the job. Additionally, some workers comp insurance can pay out death benefits to your employee’s family if the worst were to happen.
Most states require business owners with one or more employees to have this coverage, so if you’re planning on hiring soon, it may be worth getting.
Have you ever found yourself in a position where you’re ready to make a big decision — like getting a loan or moving to a new place — only to find that you’re missing a critical part of the application?
The same scenario can happen in your business. For example, if you want to take out a lease on a new location or you’re applying for a business loan, it can be a pain in the you-know-what to have a landlord or loan officer ask you for proof of business insurance.
Which, they likely will.
That’s because business insurance can play a key role in smoothing the process for several major business milestones, such as:
Without business insurance coverage, you may have to get a policy before you can move forward with that exciting new milestone.
And as a busy sole proprietor, you don’t have time to do the same thing twice. That’s why having a policy at the ready can help you achieve your important business moments faster!
Unlike many other insurers — who may provide you only with a policy from their company — our quote comparison tool makes it easy to compare free quotes from the nation’s top insurers.
That means you can compare policies without having multiple browser tabs open on your computer!
While comparing sole proprietorship insurance policy options, make sure you find one that fits your business’s needs.
For example, if you know that a client expects you to have at least $1 million in aggregate coverage, you can quickly review each policy option to see if they meet that requirement.
At Simply Business, we make it easy for you to compare a number of policy items, including:
If you see a policy option you like, just click it to get it — simple enough, right?
We get it: Sometimes you just want someone to walk you through your insurance options so you can feel more confident about what you’re getting.
That’s not a problem! We have a team of US-based licensed insurance agents who are ready to help answer your toughest questions. You can reach them (and us!) at 844-654-7272.
We hope this article helps you feel more empowered while finding business insurance for your sole proprietorship. Don’t forget, if you need more great small business info, check out the rest of our blog, Simply U!
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.