Business Insurance for Sole Proprietors: What Coverage You Need, Best Options

Business insurance can protect sole proprietors against lawsuits, auto accidents and other risks.
Rosalie Murphy
Tina Orem
By Tina Orem and  Rosalie Murphy 
Edited by Ryan Lane

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If you’re a sole proprietor, business insurance — such as general liability insurance, commercial auto insurance and a business owner’s policy — can protect both your business and personal assets in case of lawsuits and other risks. You can probably get the policies you need in just a few minutes online.

Here are NerdWallet’s picks for the best business insurance options for sole proprietors, based on each company’s financial strength, volume of customer complaints, online features and claims experience.

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Best business insurance options for sole proprietors

The best business insurance companies for sole proprietors make it easy to get the coverage you need quickly.

Next: Best overall insurance provider for sole proprietors

5.0

NerdWallet rating 

Next explains which policies you need based on what industry you’re in and how you answer questions during the quote process. The company also sells most common types of business insurance online, including general liability insurance, professional liability insurance and commercial auto insurance. So whether you need insurance for your cleaning business, personal trainer insurance or otherwise, Next may be a good choice. Read NerdWallet’s review of Next business insurance.

Chubb: Best general liability insurance for sole proprietors

5.0

NerdWallet rating 

Chubb received fewer complaints about general liability insurance relative to its market share than any other business insurance company evaluated by NerdWallet. You can buy general liability insurance online from Chubb if your business earns $1 million or less in annual revenue. Chubb also offers a business owner’s policy, professional liability insurance and cybersecurity insurance online. Read NerdWallet’s review of Chubb small-business insurance.

Thimble: Best for temporary coverage

4.0

NerdWallet rating 

If a contract for an event or job requires you to have business insurance, Thimble offers insurance policies a month at a time or for one specific job. This can help you save money, since you won’t have to pay a premium on an ongoing basis. Thimble offers general liability, professional liability and commercial property insurance, but not commercial auto insurance. Read NerdWallet’s review of Thimble insurance.

The Hartford: Best business owner’s policy for sole proprietors

5.0

NerdWallet rating 

You can add data breach insurance and professional liability insurance to The Hartford’s business owner’s policy, making it a good choice for small-business owners who don’t want to manage multiple policies. Some business owners can buy a policy online, or The Hartford may connect you to a staff member to complete your purchase. Read NerdWallet’s review of The Hartford business insurance.

Allstate: Best for commercial auto insurance

4.5

NerdWallet rating 

You can get a commercial auto insurance quote online from Allstate, which is one of the top 10 providers of commercial auto insurance by market share in the U.S., according to the Insurance Information Institute. You can also get a business owner’s policy and other coverages directly from Allstate. The company’s high rating from NerdWallet reflects the low number of complaints filed with state regulators relative to its size. Read NerdWallet’s review of Allstate business insurance.

Do sole proprietors need business insurance?

Sole proprietors should at least carry general liability insurance. This coverage protects you if someone files a lawsuit accusing you of damaging their property, injuring them or harming their reputation. As a sole proprietorship, a lawsuit could jeopardize your personal assets, not just your business finances.

You may also want to consider the following types of business insurance depending on what sort of work you do.

Type of insurance

What it covers

Claims of mistakes, negligence, inadequate work, inaccuracies, misrepresentation or similar allegations. Your business may need errors and omissions insurance if it provides services to customers for a fee.

Damage to your office or items your business owns as the result of natural disasters, fire, smoke or vandalism. You may need commercial property insurance if you own a building, use valuable equipment or keep inventory in stock.

Loss of income when your business is unable to operate due to a disaster covered by commercial property insurance. If you buy property insurance, you should also consider business interruption insurance.

Vehicles used for business. Your personal auto insurance may or may not have coverage for limited business use of your car. However, if you use your vehicle often for business, you’ll likely need a commercial auto policy.

Data breaches or software hacks. If hackers breach your computer system and steal your customers’ credit card information, for example, this insurance would cover the costs of notifying customers, setting up credit monitoring and investigating the attack.

Most sole proprietors don’t need workers’ comp. But if you work as a subcontractor or hire independent contractors, you may be required to carry it. Learn more about workers’ comp requirements by state.

If you need commercial property and business interruption insurance, consider a business owner's policy. BOPs usually combine those coverages with general liability insurance. You may also be able to tack on some cybersecurity insurance and professional liability insurance coverage as well.

How to get business insurance for your sole proprietorship

Sole proprietors can get business insurance online or over the phone, either right from an insurance company or through an insurance marketplace or third-party broker. Get multiple quotes from different business insurance providers before making a decision.

When comparing quotes, consider things such as:

  • Policy coverage: Business insurance policies are often quite similar from one provider to another. But look closely at exclusions, additional coverages and endorsements in case there are key differences there.

  • Limits of liability: The per-occurrence limit is the maximum the insurance company will pay out for each claim and the aggregate limit is the maximum amount the company will pay out during the policy term. Larger or riskier businesses may need a higher limit.

  • Price: Compare policy premiums as well as deductibles, which is the amount you’ll have to pay out of pocket before your insurance kicks in. Lower premiums often come with higher deductibles, which means you’ll pay less on a monthly basis but more in the event of a claim.

After you buy your insurance policies, make sure you understand when your payments are due and how to manage your coverage — including how to file a claim, add endorsements or get a certificate of liability insurance.

Reevaluate your business insurance coverage annually. When your policies are up for renewal, think about how you like the coverage, costs and customer service you’re getting, as well as any new risks you face. That way you’ll always be sure you have the right coverage for your business.

What's the best fit for your business?
Answer a few questions and we'll match you with an insurance partner who can help you secure quotes.
Methodology

Business insurance ratings methodology

NerdWallet’s business insurance ratings reward companies that offer small-business owners reliability and ease of use. Ratings are based on weighted averages of scores in several categories, including financial strength, customer complaint data, shopping experience and customer service. Learn more about how we rate small-business insurance companies.

These ratings are a guide, but insurance policy details and prices can vary widely from business to business and provider to provider. We encourage you to shop around and compare several insurance quotes.

NerdWallet does not receive compensation for any reviews. Read our editorial guidelines.

Insurer complaints methodology

NerdWallet examined complaints received by state insurance regulators and reported to the National Association of Insurance Commissioners in 2018-2021.

To assess how insurers compare to one another, the NAIC calculates a complaint index each year for each subsidiary, measuring its share of total complaints relative to its size, or share of total premiums in the industry. To evaluate a company’s complaint history, NerdWallet calculated a similar index for each insurer, weighted by market shares of each subsidiary, over the three-year period.

Our star ratings consider ratios for both general liability insurance and commercial property insurance. When an insurer sells policies that are underwritten by several different insurance companies, we consider the NAIC complaint ratios of all the underwriters.