As a sole proprietor, you’re responsible for the legal implications of owning and operating your own business. While you have built it from the ground up, giving your time, energy, and money to create a business you can be proud of, there are risks involved in owning your business. These risks should be considered when choosing the right type of business insurance. Along with the help of your insurance agent, it’s important to identify your business risks to be sure your bases are covered in the event of an emergency, unexpected catastrophe, or any other disaster that can cause you financial struggle.
Types of Business Insurance for Sole Proprietors
Because there are a variety of types of business insurance policies for sole proprietors, each is important to consider. When you think about choosing business insurance, think ahead about the possible risks of your business and what effect they would have on your assets. The following are the main types of business insurance for sole proprietors:
Most businesses use a vehicle for company purposes, whether you provide mobile services, pick up equipment or supplies, or make deliveries. If youâ€™re using a vehicle for business, it should be covered by a commercial auto insurance policy. Commercial auto is a type of business insurance policy constructed specifically for company vehicles. It will provide coverage in the event of an accident, including covering medical treatments of anyone who was injured in the accident and making repairs on the vehicle. Some commercial auto policies also provide protection against theft or vandalism.
Errors and Omissions/Professional Liability
An errors and omissions insurance policy, also called professional liability insurance, is an insurance policy crafted to protect your company against lawsuits and legal ramifications of various claims due to an error or mistake you made in providing a service, which may result in a financial loss to the customer. Errors and Omissions coverage will defend the claim and pay the loss if necessary. Other types of claims that may be covered include negligent advice, breach of contract and misrepresentation of services.
A general liability insurance policy is also important for sole proprietors. Like the errors and omissions policy, it can help pay for legal costs when a previous customer or client has a claim against you. General liability also provides coverage for other risks associated with your business, including property damage or bodily injury.
Products Liability Coverage
An products liability insurance coverage, which can be included as part of your general liability policy, is an insurance policy crafted to protect your company against lawsuits and legal ramifications of various claims stemming from incidents arising from your products. This includes a previous client claiming the products you sold them were defective which in turn affected their own business, or claims from customers who became injured from products you provided.
Preparing for the various risks which may negatively affect your business is an important aspect of having a successful business. You may also want to consider health insurance since as a sole proprietor you are not covered under a group insurance policy. This will help you to be fully covered for both business and personal reasons.