What sole proprietor business insurance do I need?

As a business owner, are you required to have financial protection for your company? That depends. Certain types of coverage may be mandatory in your state and for your specific type of business.

For example, if you have employees, most states require you to carry sole proprietor workers' compensation insurance. Additionally, some companies require that the businesses they work with have business insurance before they will sign a contract, and some landlords require that you have insurance coverage for your rented space.

So, is business insurance required for a sole proprietor? The short answer is that it can be. Consequently, it’s crucial to do your research. Keep in mind that even if coverage isn’t strictly required by law, having sole proprietor insurance is a smart way to protect your livelihood.

Business owners often ask, “What insurance does a sole proprietor actually need?” The answer to that question is based on the specific risks of your industry. Every business has unique insurance needs based on its operations.

If customers visit your premises, you will likely need general liability insurance. If you provide professional advice or services, errors and omissions insurance (also called professional liability insurance) is essential. If you have business assets like equipment or furniture, a business owners policy can protect those items.

One of the best ways to understand your specific needs is to go through an online quote process or talk with a licensed insurance expert at biBerk.

A fundamental part of your protection strategy should be general liability insurance for sole proprietors. This policy provides various types of protection, including for incidents where you damage a client’s property.

For instance, if you’re a residential painter and accidentally knock over a full tray of paint onto a client's expensive rug, this insurance can help cover the restoration or replacement costs. It also covers instances where your business is sued for libel, slander, or copyright infringement.

Do sole proprietors need liability insurance? In most cases, the answer is yes, because even a small accident can lead to an overwhelming financial burden if you’re not protected.

Workers’ compensation insurance can protect you as a sole proprietor if you choose to carry it.

It covers medical expenses and provides help with missed wages. By having this coverage, you ensure that your business finances are protected if an accident happens on the job.

You might wonder, “How much will I pay for sole proprietor business insurance?” The price of your coverage depends on your industry, your location, and the specific policies you choose.

The best way to find out what you will pay is to get convenient online quotes. At biBerk, we provide sole proprietor business insurance directly without a middleman or insurance broker. This allows us to pass the savings on to you, with our policies often costing significantly less than those from other insurance companies. You can get a quote and get covered online in minutes, which helps you get back to focusing on your operations.

When buying business insurance as a sole proprietor, you should consider a variety of coverage types to ensure all your risks are managed. Here is a list of the most common insurance policies that sole proprietors often need to stay protected:

• General liability insurance. As noted above, this fundamental policy protects you if a visitor is injured at your place of business or if you accidentally damage someone else’s property.
• Errors and omissions insurance. This policy is essential for consultants or anyone providing professional advice because it covers claims of mistakes or failures to perform a service that caused financial damage to a client.
• Business owners policy (BOP). This is an efficient way to save money by combining property and liability coverage into a single package for small businesses.
• Commercial auto insurance. If you use vehicles for work, this policy covers accidents and lawsuits related to your company-owned or leased cars or trucks.
• Workers' compensation insurance. This policy is required for nearly every company with employees and covers medical bills and lost wages for work-related injuries.
• Cyber insurance. This coverage protects your company from the financial repercussions of a cyberattack where sensitive information is stolen and potentially used to commit fraud.
• Umbrella insurance. This provides an extra layer of security by covering claims that exceed the limits of your primary biBerk liability policies.

It’s crucial to understand what happens if a sole proprietor has no insurance. Small business insurance protects companies from many risks, such as accidents, injuries, natural disasters, and professional errors. Without coverage, these incidents could create an overwhelming financial burden that you would have to pay for out of your own pocket.

You can learn more about insurance and other topics for business owners on the U.S. Small Business Administration website.