May 1, 2019

Do I Need Small Business Insurance As a Sole Proprietor?

Most small businesses need insurance, for few businesses could withstand a major catastrophe if they didn’t have coverage in place. Even small business owners who operate as sole proprietors normally ought to have a policy in place for their business. If you’re a sole proprietor in Massachusetts, here’s why you should have small business insurance for your work.

Do I Need Small Business Insurance If I’m a Sole Proprietor in Massachusetts?

Sole Proprietors Are Exposed to Risks

Although many sole proprietors in Massachusetts run truly small businesses, their ventures are still frequently exposed to risks.

The exact risks that your sole proprietorship is exposed to will depend on what type of work you do. There’s almost certainly at least some potential perils that could cause trouble, though.

For example, an accident while driving to a client’s site, a data breach that compromises customer information, a fire that damages equipment and a libel suit that’s filed over something written are just a few of the troubles that a sole proprietor might face.

Personal Insurance Policies Aren’t for Businesses

Sometimes sole proprietors assume their work-related activities are covered by their personal insurance policies, but personal policies generally aren’t designed to insure business activities.

Once in a while, a personal policy can be adjusted to protect both the individual policyholder and their business. A homeowners policy may be amended to cover a home office, or a personal auto policy might be modified to cover running work-related errands.

Not all personal policies offer such options, though, and those that do sometimes provide only minimal coverage. Relying solely on personal policies will often leave your sole proprietorship with coverage gaps. Those gaps can be devastating if you ever face a catastrophe.

Small Business Insurance Offers More Robust Protection

As it’s specifically designed for small businesses, small business insurance generally provides better protection for sole proprietorships.

Exactly what kind of insurance you sole proprietorship needs will depend on what risks it’s exposed to, which stem from the type of work you do. Depending on your industry and occupation, you might want:

  • Property Coverage, which might cover equipment or buildings your business owns
  • Auto Coverage, which might cover vehicles your business owns
  • General Liability Coverage, which might cover common accidents
  • Professional Liability Coverage, which might cover certain work-related errors
  • Umbrella Liability Coverage, which might provide additional liability protection
  • Business Interruption Coverage, which might cover certain revenue decreases
  • Other Coverages, of which there are many specialized coverages available

Should you need several of these coverages, it might cost less to get them through a package policy. Business owners policies (BOPs) typically combine essential insurance coverages, such as property coverage, general liability coverage and business interruption coverage. Commercial package policies (CPPs) tend to be more robust and sometimes include specialized protections.

(Several of the coverages listed above have personal policy counterparts that offer similar protections. For the reasons mentioned above, a personal policy that’s similar shouldn’t be mistaken as a commercial policy. The amount of protection offered is frequently different.)

Work with a Knowledgeable Massachusetts Insurance Agent

For help finding the right small business insurance for your Massachusetts sole proprietorship, contact the insurance agents at Scotti Insurance Agency. Our agents are knowledgeable and independent, which means they can help you determine what coverages your sole proprietorship needs and then compare different insurers’ policies that offer those coverages. They’ll make sure you get a great policy at a price your business can afford.

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