What Business Insurance Do I Need as a Sole Proprietor? If you’re looking to start a business, one of the many things you’ll need to do is choose a business structure, and one structure that may suit you is called a sole proprietorship. But what exactly is a sole trader, and what are the pros and cons of being a sole trader? A sole trader is a self-employed person who runs their own business.
For example, a freelance graphic designer who operates as a sole Trader
What is a Sole Proprietorship?
A sole proprietorship is a type of business where one person owns and runs the whole thing. If you’re the sole owner, you’re in charge of everything—debts, taxes, legal stuff, and even accidents or losses caused by the business. Having the right insurance can help cover some of these costs.
This is the easiest and most common way to start a business. Legally, it means the business owner isn’t part of a big company or limited liability company (LLC). Simply put, there’s no separation between the business and the owner.
- Top 5 High-Income Skills In Tech In 2024, According To Indeed
- The Top 5 High-Paying IT Skills for 2024, Per Indeed
- Open AI’s Sora vs. Google’s Gemini 1.5: The Future of AI
- Nio stock analysis: Should you buy, sell, or hold in 2024?
- Will Shiba Inu coins hit 50 cents?
Why does a sole proprietor need insurance?
If you’re wondering whether a sole proprietorship needs business insurance, the simple answer is yes. Unlike LLCs or corporations that provide extra protection, a sole proprietorship can make you personally responsible if there’s an accident or mistake in your business.
If you have a small business and a customer sues you for slipping on a wet floor, as the sole owner, you would have to pay all the legal costs and compensation yourself.
Business insurance can support you if someone gets injured or your work damages property. It provides financial help for medical bills and repairs in such situations.
General Liability Insurance
Physical harm
It’s also known as “slip and fall insurance.” This part of your liability policy protects you if someone else gets injured at your business.
Property damage
Suppose you accidentally damage someone else’s property, like ruining a client’s expensive carpet. In that case, general liability insurance will help cover the costs of fixing or replacing it, up to the limit stated in your policy.
What type of insurance do sole proprietors need?
Many business owners begin by getting business liability insurance when they’re sole proprietors. However, the best insurance for sole proprietors usually includes various types of coverage.
Commercial Property Insurance
Commercial property insurance is there to safeguard your business belongings, stock, and the place where you operate. If an incident such as a fire or water damage occurs to your property, this insurance can assist with covering the expenses of replacing or repairing your assets. Additionally, it can provide support for any income loss during the time it takes to recover and resume operations.
