Many people choose to venture into business after they graduate and have little income to start. A sole proprietorship is the easiest structure and the most preferred way of building a business.
A sole proprietorship means that the owner and financier are not part of a company or corporation. The business owner and the business are the same. Inevitably, one must consider sole proprietor insurance.
Since the owner is responsible for the business decisions, one must consider their debts, losses, profits, liabilities, and assets.
Why Choose Sole Proprietor Insurance?
Running a sole proprietorship comes with many merits. For instance, the owner makes all the decisions affecting the business without making consultations. Similarly, sole proprietorship comes with demerits. For example, if an accident happens and an employee is injured or a third party’s property damages, it’s the business owner to bear the compensation losses.
To mitigate losses, every business owner should consider insurance that caters to their unique needs. A standard liability insurance caters to bodily injury, personal injury, and property damage.
- Bodily injury- A third party who gets injured in your business premises should be compensated. For instance, a client who slips or falls while on your property needs treatment to recover.
- Personal injury– As your business continues to grow, you’re likely to suffer defamation, misinformation, advertising errors, and discrepancies that may attract penalties and lawsuits. However, personal injury insurance covers the brand’s reputation.
- Property damage- This insurance covers any losses incurred while working on a client’s property or assets. For instance, property damage insurance handles the damage when a client’s car gets in an accident while repairing, or breaking fragile assets while working in their house.
It is critical to shop from many insurance providers to find one that caters to their unique needs.
Compare coverage costs
Insurance affordability varies widely. Shop and settle for a pricing plan that suits your business budget. Ensure the insurance premium fits your business financial muscle.Additionally, consider the deductible you’d need to pay if an accident happened. Make use of free quotes provided online by insurance providers.
Are there specific legal requirements that apply to your business location? Find out legal insurance requirements a sole proprietorship entity needs to satisfy before purchasing one.
If an accident happens, the business owner needs to settle a specified amount before the insurance takes the rest of the compensation. This pre-determined amount is referred to as a deductible.
Typically, deductibles and premiums are inversely proportional. Therefore, if the deductible is high, the premiums are relatively low.
The acceptable deductible depends on your business risk exposure. Many low-risk businesses opt to pay higher deductibles and lower premiums. If your business is prone to frequent accidents, you may choose to pay higher premiums and lower deductibles.
Choose the balance that works to save you considerably if an accident happens.
Your business needs
General liability insurance is a critical cover for most sole proprietor businesses. However, survey your work environment and decide what caters to your needs cost-effectively. You may need to purchase a business owner’s policy together with commercial property insurance.
A sole proprietor business is the lifeline of many start-up entrepreneurs. Sole proprietor insurance is an excellent cover when accidents happen.