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Sole Proprietor Insurance: Cost & Quotes From $11

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There are many things to consider when starting a sole proprietorship, and one of the most important things is insurance. That's because there is risk involved in any business venture, but the sole proprietor takes that risk home.

What is a Sole Proprietorship? 

A sole proprietorship is a business that is owned by one person. It is the simplest type of business a person can create. As such, it is the most common business structure. However, there are some downfalls to sole proprietorships. 


One of the biggest downfalls of sole proprietorships is that they are not incorporated. In other words, the business is not its own legal entity. That means the owner is liable for the actions of the company, which means the sole proprietor needs insurance. 


On the positive side of things, sole proprietors get to keep all profits after taxes. The simple business structure makes planning and strategic maneuvering an easier process. Owners don't have to deal with the fees, extra taxes, and accounting & legal expenses of a corporation. 


In summary, the sole proprietor maintains total control of his or her company but also assumes total responsibility. All businesses should have insurance, but for sole proprietors, not having small business insurance for sole proprietor could mean losing everything. 


Why Does a Sole Proprietor Need Insurance? 

Many sole proprietors make the mistake of thinking they don't need insurance. Maybe their industry is risk-adverse, and they don't see the possibility of a lawsuit as a real threat. 


In actuality, lawsuits and threats of lawsuits are very real. According to a 2020 report from the U.S. Chamber Institute for Legal Reform, 43% of small businesses surveyed were involved in lawsuits or threatened with one. That number has probably grown in lieu of the continued pandemic. 


Why sole proprietors need insurance stems from multiple risks that all businesses face for which they can be held liable. These include:  

  • Property damage

  • Employee or customer injury

  • Breach of contract

  • Discrimination against employees or customers

  • Auto accidents

  • Premises liability (someone injured due to property conditions)

  • Improper or illegal use of intellectual property

  • Errors and omissions

  • Breaking labor laws


Sole proprietors need insurance because the list above is a substantial list of possible lawsuits, but it is only a partial list. There are countless reasons a person may file a lawsuit, and the costs are great for sole proprietors if they do not have sole pro insurance. 


Sole Proprietorship Insurance Requirements

A sole proprietorship may not have any insurance requirements. States typically require workers' compensation insurance when there are a certain number of employees. Oftentimes, small business owners are forced to get insurance due to lender or licensure requirements. In many cases, they are free to take on the risk of business ownership with no personal financial protection. 


Regardless of the sole proprietorship insurance requirements, sole proprietors should consider some basic insurance in order to protect themselves from a lawsuit. The policies a business owner should consider are:  


There are other insurance coverage options available for specific industries that might not be listed here, but this is a comprehensive list of typical policies a sole proprietorship might need. 


Sole Proprietor Business Insurance

Basic business insurance, or a  business owner's policy (BOP) , blends both property insurance and commercial liability into one policy in order to make it easy and more affordable. The hazard insurance for sole proprietorship protects the building that you own or the property store in a rental. It is not the only policy most businesses (especially those with employees) will need but it does provide acceptable coverage for many sole proprietorships. 


One of the advantages of  business insurance  for sole proprietor is it may include things a sole proprietor may not think of as a risk, such as business interruption coverage, errors and omissions insurance sole proprietor, legal fees, or defamation losses. It might include professional liability insurance for sole proprietorship. These extra coverages provide protection from things you may need but never imagine. 


Any sole proprietor business insurance, whether it is combined liability and property insurance or not, is an excellent starting place for the business owner who is looking to lessen risk. 


Sole Proprietor Workers' Comp

A workers compensation for sole proprietor policy is necessary coverage for many sole proprietorships who have employees, and depending on the state, it may be a requirement. This is the coverage you provide for your employees in case they are hurt and injured on the job. Check with local state regulators to find out which workers compensation insurance for sole proprietors would be best for you. 


A sole proprietor workers comp policy covers multiple types of losses, including:  

  • Cost of medical treatment

  • Lost wages

  • Rehabilitation

  • Prescription drugs 


When shopping for workers comp insurance for sole proprietor, you might find it sold as a standalone policy or as a bundle to provide comprehensive business coverage. Sole proprietorship and workers compensation are not always necessary, but they really should coexist when there are any employees working for the business. 


You might be asking yourself, as a sole proprietor do I need workers comp? The answer is yes, if you have employees, and a sole pro workers comp policy will provide peace of mind for your staff. The cost of workmans comp for sole proprietor is not great, but it is not deducted from employees' payroll. Generally, the cost of workmans comp sole proprietor is also calculated from payroll. 


Sole proprietor workmans comp policies are necessary if required by the state, or else an employer could face fines or even jail time. Many small business owners wish that sole proprietor and workers comp weren't a combination because the cost can be significant, but imagine if employees did not have it. Sole proprietor workers compensation insurance ensures that your business is running ethically and taking care of employees. 


Sole Proprietor Liability Insurance

Many sole proprietors who are running on a tight budget and looking to protect themselves from the most damaging risks opt only to get sole proprietorship liability insurance. General liability for sole proprietor can protect the company's operating capital and allow it to continue running even after a lawsuit. Liabiilty insurance for a sole proprietorship is considered an essential part of the business. 


This is because general liability insurance for sole proprietor protects the business owner from damage that the business caused. This may be a result of accidents or neglect, but it does not really matter. The business is held liable for the damages, and the liability insurance covers it. 


Many states require general liability insurance for sole proprietorships in order to get a license to do business. Even if it is not a requirement, sole proprietorship liability insurance is a smart business decision. 


Group Health Insurance for Sole Proprietors

The insurance needs of a sole proprietor change greatly when there are employees, but not all sole proprietors are required to offer sole proprietorship group health insurance. Depending on state and federal requirements, sole proprietors may have to offer full-time employees this benefit. 


For example, the Affordable Care Act stipulates that businesses with over 50 full-time employees must offer health insurance. 


Group health insurance for sole proprietors is more affordable than individual health insurance because the risk is spread among a pool of employees rather than one person. Often, the only way an individual can afford private health insurance is through a group health policy provided by the employer. 


Of course, health insurance is never inexpensive, which is why many sole proprietors with small-scale businesses don't offer it to their employees. If you do some research, you should be able to find the best health insurance for sole proprietorship to meet your budgetary needs. 


Do You Need Sole Proprietor Medical Insurance?

If you are a sole proprietor with no employees, then you won't qualify for group health insurance. Health insurance for sole proprietorship business is often only considered for employees.

 

Some medical insurance for sole proprietorship policies may offer a reduced rate for self-employed individuals. There is also a tax deduction allowed for sole proprietor health insurance who ultimately have to buy individual policies for themselves. 


Business owners may also want to consider disability insurance for sole proprietors in case something happens that prevents them from working. Small business health insurance sole proprietor style is different than big corporation style because it may be the only thing that keeps enough people working to continue the business. 

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Sole Proprietorship Insurance Cost

  • The average cost of sole proprietor insurance is $39.58 a month or roughly $474.96 a year for a $1 million general liability coverage

  • Sole proprietors pay $859.17 a month or $10,310 a year for group health insurance

  • Workers comp for sole proprietors is $45 a month or $540 a year


When looking at sole proprietorship insurance cost, it pays to shop. Sole proprietorship liability insurance cost should be looked at as a necessary item to budget, but you'll want to see how many other coverages you can afford. Below are a few insurance companies where you might want to start. 



Monthly Rate Annual Rate Colored Text Best for
CoverWallet $11 $132 Sole proprietor insurance quote comparison online
Next $19 $228 Sole proprietor insurance with discount options
Hiscox $30 $360 Sole proprietorship insurance with expert advice

 

 

Best Sole Proprietor Insurance Companies


CoverWallet Sole Proprietor Insurance


Why Get Insured by CoverWallet?

  • CoverWallet allows you to compare sole proprietor insurance quotes

  • Easy online policy management

Why Take CoverWallet with a Grain of Salt?

  • Not an insurance carrier but a broker selling the insurance products of its partners


If you are looking for a full service insurance company to meet your sole proprietorship insurance needs, CoverWallet has got you covered. From restaurants to beauty salons , they know the insurance that will cover you in your industry. They also have policies starting at $11! That's only $132 a year less a paid in full discount when applicable. 

 

Best for:   S ole proprietor insurance quote comparison online

Average cost: $11

Our rating: 10/10

 



Next Insurance for Sole Proprietors


Why Get Insured by Next?

  • Offers discounts if you buy policies in bundles

  • No cancellation fee

Why Take Next with a Grain of Salt?

  • Next handles things digitally so policyholders used to traditional insurance processes might have to adjust on how Next does things


Next Insurance offers all the business insurance policies you will need for your company, and they offer a 10% discount when you bundle policies. The company advertises policies starting at $19 a month. That's an annual rate of $228.

 

Best for: Sole proprietor insurance with discount options

Average cost: $19

Our rating: 9/10

 

 



Hiscox Sole Proprietorship Insurance


Why Get Insured by Hiscox?

  • Can cover you regardless of your business industry

  • Offers high policy limits

Why Take Hiscox with a Grain of Salt?

  • Not all insurance products can be purchased online


Hiscox Insurance is a popular choice for many business owners because they offer sound insurance advice for sole proprietorships. Their advertised cost of some general liability policies is only $30 per month. That's $360 per year. 

 

Best for: Sole proprietorship insurance with expert advice

Average cost: $30

Our rating: 8/10


The Right Insurance Mix is Essential for Your Small Business 

When you are looking for the best insurance for sole proprietorship, having the right policies can mean the difference between financial security and financial ruin. Business liability insurance for sole proprietor may be all that you need, but there are probably better combinations such as sole proprietor workers comp insurance. That is why you want to reach out to a company who will get you the right insurance mix to meet your needs.


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