Every small business owner or entrepreneur needs to be financially prepared to deal with unexpected events or accidents should they happen. It’s why these savvy business people purchase liability insurance.

The same applies to self-employed professionals or solopreneurs who do not work for a company. Instead, they agree to a contract for services with an employer, work independently, are free to determine when and for whom they work, and may choose to work for multiple employers simultaneously.

According to the Labour Market Information Council, solo self-employed Canadians (individuals who work independently without employees) account for 73% of all self-employed people. 

These self-employed professionals also need to prepare for the unexpected by having a backup plan to help them recover financially from an accident, mishap, or lawsuit.

A self-employed professional researching her insurance options.

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Zensurance - Small Business Insurance Guide

What Types of Insurance Do Self-Employed Professionals Need?

Determining what types of insurance a policy for self-employed professionals or solopreneurs should have depends on the specifics of what you do. However, most self-employed insurance policies include the following coverages:

General liability insurance

General liability insurance is the most common coverage self-employed and other small business owners purchase. It covers the cost of third-party bodily injury or property damage resulting from an accident at your business or during regular operations. Many contacts or companies may only hire you if you provide them with proof (usually called a certificate of insurance) that you have a valid policy.

Commercial property insurance

Whether you work out of your home or another location you own or rent, commercial property coverage protects your workspace, contents, inventory, furniture, and electronics if damaged because of a fire, burst water pipe, theft, vandalism, or severe weather like a tornado or windstorm. However, if you operate your business from home, be advised your residential home or condo insurance may not cover those losses since home policies aren’t designed to protect business-related activities.

Professional liability insurance

Whether you call it professional liability or errors and omissions (E&O) insurance, it’s a must-have if your work involves advising clients, offering services, or developing products for them. If you make a mistake, are accused of negligence, fail to deliver what you promised, and your client suffers a financial loss, you can be held liable. Professional liability coverage can cover your legal expenses if sued and any damages awarded to the client who took you to court.

Commercial auto insurance

If your self-employed venture requires a vehicle to transport people, materials, or goods, then you need to consider getting a commercial auto insurance policy. Unfortunately, a personal car insurance policy typically doesn’t cover accidents for a vehicle used for business reasons.

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5 Ways to Get Low-Cost Business Insurance

Here are five ways to get the self-employed business insurance policy that suits your needs and budget:

1. Ask for recommendations

If you don’t ask, you don’t know. Talk to your friends, other self-employed folks, or small business owners for their suggestions on what insurance companies to consider. Then, look those insurers up online and check the reviews they get from their current and former customers.

2. Work with a business insurance broker

Having a licensed business insurance broker in your corner can simplify and streamline your search for affordable coverage. A broker is like a trusted advisor who will answer questions about insurance policies (the terminologies can get confusing) and craft a customized policy to ensure you are neither underinsured nor overinsured.

3. Talk to local industry groups

If you are part of an industry group, local Business Improvement Association, or Chamber of Commerce, inquire if a business insurance partner provides a discount on premiums for their local business members.

4. Weigh the cost of risk

Everyone wants to find the cheapest insurance policy, but going for the lowest of the low among premiums may not be the best option. For instance, if you’re underinsured and file a claim for something you don’t have coverage for, it’ll potentially cost you significantly more than an annual premium for a comprehensive insurance package.

5. Choose high deductibles

A deductible is your share of the cost for damage or loss if you file an insurance claim. You can choose your policy’s deductibles; in general, the higher the deductible, the lower the annual premium and vice-versa. 

Zensurance specializes in helping Canadian self-employed professionals, solopreneurs, independent contractors, entrepreneurs, and small business owners across Canada get the low-cost business insurance coverage they need. 

Fill out our online application for a free quote. With more than 50 Canadian insurance providers in our partner network, we can get you insured quickly, and our experienced brokers can customize your coverage to suit your specific requirements.

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About the Author: Jon Hogg

Jon Hogg is the Senior Team Lead, Renewals, at Zensurance.