Sole proprietors make a choice to go it on their own. It gives them a lot of independence. At the same time, there are many risks they need to face on their own, without the support of business partners or employees. One of the best ways to maintain their independence while managing risks is by getting the right business insurance coverage.
In this article, we’ll reveal the top 5 business insurance companies for sole proprietors and explain everything required for them to get the right coverage.
- 5 best business insurance companies for sole proprietors
- Do I need business insurance for sole proprietors?
- Business liability insurance for sole proprietors
- Do sole proprietors need workers’ comp coverage?
- How much does business insurance for sole proprietors cost?
5 best business insurance companies for sole proprietors
- Simply Business: Best for the right sole proprietor business coverage at the right price
- Hiscox: Best for sole proprietors with unique insurance needs
- Next: Ideal for sole proprietors who prefer to buy insurance online
- biBerk: Best for low-cost sole proprietor business coverage
- The Hartford: Best for independent business people looking for a sound and ethical insurer
Simply Business: Best for comparing several quotes online
Simply Business is more than a company name. It’s how the organization approaches small business insurance. The company takes pride in making insurance for sole proprietors clear, simple, and affordable.
The firm was founded in 2005 and is headquartered in Boston and London. It’s an online insurance brokerage that specializes in protecting small businesses.
Simply Business is committed to helping sole proprietorships and other small businesses find the right coverage at the right price. With Simply Business, all you have to do is input information online about your business, and it will present you with quotes from top insurance providers. This allows you to compare costs and coverages and select the best insurance for your business all in a single place. It’s the simplest way for busy single person business owners to get coverage.
Here is a sample sole proprietorship quote from Simply Business.
Hiscox: Best for sole proprietors with unique insurance needs
Hiscox offers a complete array of business coverages and is a leading insurer that specializes in protecting small businesses.
The firm makes it easy to purchase all types of business insurance online. You can also speak with experienced business insurance experts who can help you customize your coverage to meet your unique needs. Hiscox also offers top tier service, provides fast quotes, instant coverage, and quick claims processing.
If you choose Hiscox for your business coverage, you can rest assured knowing you’re entrusting your sole proprietorship to a firm that’s been in operation since 1901. More than 400,000 businesses choose Hiscox for coverage.
Next: Ideal for sole proprietors who prefer to buy insurance online
Next is changing how businesses purchase insurance coverage.
Its operation is focused on delivering the ultimate online insurance experience. Because of this, you’re able to purchase a policy, file a claim, or get a certificate of insurance any place, any time, 365 days a year. Even though Next is an online insurer, you can get expert help over the phone when you need it. The firm is also known for being able to make most claims decisions within 48 hours.
Despite the fact that Next is a relatively new and innovative company, you can rest assured knowing it has an excellent rating from A.M. Best, an insurance company rating agency. All the company’s policies are backed by MunichRe, an established insurance company and reinsurer. More than 10,000 business owners have turned to Next for their insurance needs. The company has earned a solid 4.7 customer rating.
Here is a sample quote from Next.
biBerk: Best for low-cost sole proprietor business coverage
After the last few years, few independent business owners are sitting on extra cash to spend on insurance. If that’s the case with your sole proprietorship, biBerk could be the ideal insurer for you.
biBerk is a low-cost business insurance provider. Despite saving money on your business coverage, you can rest assured knowing you’re still getting quality protection for the business you’ve worked so hard to build on your own. biBERK is able to lower insurance costs by almost 20 percent because it insures small businesses directly, without the added expense of having to work through a middleman or insurance broker.
You can feel confident knowing biBerk is a part of Berkshire Hathaway, a company headed by well-known investor Warren Buffett. It’s a firm that’s been insuring businesses for more than 75 years and has millions of satisfied customers.
The Hartford: Best for independent business people looking for a sound and ethical insurer
The Hartford is one of the oldest companies of any kind in the United States. It’s been offering insurance solutions for more than 200 years and has helped one million plus businesses with their insurance needs. The company takes pride in the fact that the Ethisphere Institute named it a World’s Most Ethical Company twelve times. The Hartford’s longevity and focus on ethical business practices makes it a company you can feel good about doing business with.
The Hartford’s dedicated and highly experienced small business team is available to help company owners explore their business insurance options. If you decide to purchase insurance from The Hartford, you can rest assured knowing you’re entrusting your business to a strong, stable, knowledgeable, and ethical provider.
Do I need business insurance for sole proprietors?
A sole proprietorship is one of the simplest ways to structure a business. It’s owned and run by a single person. There is no legal distinction between the owner and the business.
Despite this simplicity, sole proprietors face similar risks to other larger and more complex small businesses, including:
- Property damage
- Auto accidents.
The added risk faced by sole proprietors is that unlike other business structures, business liabilities can easily become personal liabilities. To help protect your sole proprietorship and personal finances, you’ll need to carry the right small business insurance.
The pluses and minuses of sole proprietorships
There are some good things and bad ones about sole proprietorships.
The advantages include:
- They’re simple to start
- A single person has control over all business decisions
- Preparing taxes is relatively easy
- The owner of the business earns all the money.
The disadvantages include:
- More challenging to get business financing
- Lawsuits could take personal assets
- One person making all the decisions can be stressful.
Because sole proprietors are in it alone and their personal assets could be vulnerable, it’s important that they get adequate business insurance coverage. It’s the only way you can rest assured knowing you won’t lose everything you’ve saved and own if you make a simple business error.
Business liability insurance for sole proprietors
Sole proprietorship liability insurance, sometimes referred to as business liability or general liability insurance, can help cover claims made against your sole proprietorship for:
- Customer injuries or illnesses that happen at your business location
- Certain lawsuits
- Damage you cause to a client’s property.
Without this coverage, you’d have to pay out of pocket for these expenses. And because of your business structure, that could include needing to use your personal assets to pay costs.
Do sole proprietors need workers’ comp coverage?
As a sole proprietor, it’s unlikely that your state requires you to get this insurance. However, many of your clients may make you get it before you’re able to work for them. Even if you’re not required to have it, it may be a good idea for you to secure the coverage. Workers’ compensation insurance helps provide benefits to you if you experience work-related injuries or illnesses. These benefits can help cover:
- Medical care
- Funeral expenses
- Lost wages.
A business insurance specialist can help you figure out if it makes sense for you to get workers’ comp coverage. Learn more at the best workers comp insurance for sole proprietors.
Errors and omissions, or E&O, insurance for sole proprietors
- Negligence or failing to provide adequate services to clients
- Misrepresentation related to the products or services you offer
- Inaccurate advice or direction provided while doing business.
For example, if you are an accountant or lawyer and give advice to your clients that they consider bad, inadequate, or wrong and they sue you over it, this coverage can help pay for legal and settlement costs. Legal costs will be covered whether you’re found liable or not. Many sole proprietors who work in professional services get this coverage. Learn more at the best professional liability insurance for accountants and CPAs and the best legal malpractice insurance companies.
Commercial vehicle insurance for sole proprietors
Commercial auto coverage helps pay for damaged property and medical expenses if you’re at fault for a vehicle accident while driving a personal or company owned car or truck for business reasons. If you’re driving for work and get into an accident, your personal auto insurance likely won’t cover any injuries or damages that result from it. Learn more at the best commercial auto insurance companies and the cheapest commercial auto insurance companies.
Cyber insurance for sole proprietors
If your sole proprietorship maintains a lot of data or customer records, it could be a good idea to get cyber insurance. It will help you pay costs to inform clients if a breach occurs, along with other cyber security related issues. For example, if you are a CPA sole proprietor, you work with many clients and help them with their tax filing and reporting, you should definitely need to have cyber insurance coverage. You deal with a lot of hyper sensitive information and data of your clients. Just a small data breach in your laptop, these sensitive data can be stolen and just a lawsuit, you will be bankrupt if you don’t have data breach coverage or cyber liability insurance protection. Learn more at the best cyber insurance companies and the best data breach insurance companies.
How much does business insurance for sole proprietors cost?
There are so many different types of businesses that can qualify as sole proprietorships, it is challenging to answer this question. So, there is no one set cost for sole proprietor insurance, because it depends on many factors, including your:
- Exposure to risk: Sole proprietors that work in riskier industries will pay more for coverage.
- Location: If you live in an area with more crime or a likelihood to be sued, you will probably have higher insurance rates.
- Coverage and limits: The more types of coverage you carry — and the higher your policy limits are — the more you’ll pay for coverage.
- Insurance claims history: Generally, the more claims you’ve had in the past, especially the recent past, the higher your rates will be.
On average, a business liability insurance policy for a sole proprietor should cost $65 a month. Depending on your job as a sole proprietor, an E&O insurance policy should cost around $75 a month. Learn more at E&O insurance cost for different professionals.
Different insurance companies will provide you with different rates. Be sure to shop around with a few companies to compare several quotes before making your final decision.