As a Sole Proprietor, Do I Need Liability Insurance?
In short, probably, but not always. As a one-person operation, your need for insurance will depend on what kind of good and services you offer. If you can think of a way a client could sue you for injury (as opposed to breach of contract), then you are exposed and you probably need insurance. If you are a small business owner and you are being sued for personal injury, contact a personal injury attorney immediately.
Let’s look at a few examples:
Freelance graphic designer: Generally, the work you perform is alone and doesn’t generate any products that could potentially harm anyone. However, if you frequently have clients to your home office for consultations, you might be liable for the total cost of their injuries if they slip and fall while in your home. Although you can purchase a full commercial insurance policy, you might be able to avoid that cost by asking your homeowner insurance carrier if there is a home-business rider you can add to your policy.
Network Marketing Events: Companies like Tupperware and Mary Kay depend on sales consultants to host events at other people’s homes. Here there are two risks: 1) What happens if one of the guests gets injured? Generally, that dispute will be between the host (homeowner) and the guest. 2) What happens if the network marketing representative damages the house? That might be a possible problem. If the sales consultant accidentally burns the house down during a candle demonstration, he or she could be held liable for damages. However, the parent company could be named as a co-defendant in such a case. This is a vague area of liability, so if you are a network marketing consultant with significant assets, consult with an attorney about your possible exposure.
Small Shop Owner: If you run a small shop, the landlord for the property might require that you carry insurance. If not, then you should probably buy an insurance policy anyway. Having strangers come in and out of your shop exposes you to a major liability. One slip and fall, and you could be looking at an expensive lawsuit that could strip you of your personal assets. If you are being sued and you don’t have insurance, a good personal injury attorney can help minimize your losses.