Sole Proprietorship Insurance

Different businesses have different risks; for example, a freelance writer or designer won’t require the same type of coverage as an independent construction contractor such as a plumber or handyman. However, we know what it takes to find the perfect coverage for your specific business.

We believe a comprehensive policy for your sole proprietorship should cover the risks you are most likely to face. Those risks will vary by the service or product you offer and the industry. We’ve listed the following core coverages that can apply to most business owners:

• Professional Liability Insurance: Also known as Errors and Omissions (E&O) Insurance, this coverage protects against claims alleging negligence, misconduct, or failure to deliver a service as promised. Professional Liability Insurance is essential for any sole proprietorship offering advice or service for a fee – such as a freelancing designer. It may provide legal expense coverage in the event of financial loss due to your negligence. Suppose you were a designer freelancing for a new business. You created a logo that looked too similar to a competitor’s logo, who’s now threatening to sue your client for copyright infringement. You could be responsible for the lawsuit against the business. In this case, Professional Liability Insurance could cover the legal fees and monetary judgement.

• Cyber Liability Insurance: Cyber Liability Insurance provides coverage for costs associated with electronic incidents involving your technology systems and customer data. Suppose your customer data, such as personal and financial details, are compromised due to a cyber-attack (e.g., phishing, hacking). Cyber Liability Insurance could provide coverage for notification costs, legal expenses, and risk management fees.

• Commercial General Liability Insurance: Also known as “slip-and-fall insurance,” protects against claims alleging third-party property damage or bodily injuries. Many people who work from home may assume their home insurance could cover this, but it’s unlikely if an accident occurs due to business activity. Suppose you’re an independent gardener working in a client’s backyard and accidentally damage the piping on an expensive water feature. CGL may provide financial coverage to repair or replace the broken water feature.

• Product Liability Insurance: If you sell, manufacture, or distribute a product, Product Liability Insurance can provide coverage for property damage or bodily injury caused due to a fault in your product by design, manufacturing, or a marketing defect. For example, you run a small online art store specializing in eco-friendly wall paint. A client complained that your paint caused harmful fumes after painting their living room and hallway, meaning that they couldn’t stay in their home for over a week and threatened to sue. In this case, Product Liability Insurance could cover the legal fees and monetary judgement.

• Commercial Property Insurance: Commercial Property Insurance protects your physical location and your business’s most critical physical assets – including equipment, technology, stock, and inventory. For example, if you work as a contract content writer, and your work laptop and office supplies were damaged in a flood. Commercial Property Insurance may provide financial coverage to repair or replace your damaged business equipment.

• Equipment Breakdown Insurance: Equipment Breakdown Insurance covers the cost of repairing or replacing equipment damaged due to an electrical or mechanical breakdown. This coverage is not to be confused with Commercial Property Insurance, which covers loss or damage due to an insured event (e.g., fire, theft). For example, say you’ve started a T-shirt printing business and your industrial-grade printer short circuits unexpectedly due to an electrical fault. Equipment Breakdown Insurance could cover the cost to repair or replace the printer.