Can I Get Liability Insurance Without a Business License?

Most small business owners need some type of insurance

Can I Get Liability Insurance Without a Business License?

Most small business owners need some type of insurance coverage to protect their company. One of the most important insurance policies you can have is liability insurance. But can you get general liability insurance without a business license, or do you need both?

The answer is – it depends. Here’s a breakdown of how liability insurance works and whether you need a business license to buy a policy.

What Is Liability Insurance?

General liability insurance protects your business from a variety of common risks. It typically covers the cost of compensation claims for bodily injuries and property damage.

  • Liability insurance protects you against third-party claims e.g. claims made by customers, clients, or vendors. You need a policy such as workers’ compensation to cover employee accidents. 
  • A general liability insurance policy might also include cover for slander, libel, and copyright infringement. It depends on the level of coverage you buy.

Every business owner could benefit from general liability insurance.

Who Needs Liability Insurance?

You don’t typically need commercial liability insurance by law. However, if you sell goods or services, whether it’s to the public or other businesses, you should have insurance coverage. 

  • If you don’t have insurance, your business will need to pay the costs to settle lawsuits and claims.
  • The financial losses resulting from insurance claims could damage your business. 
  • Your reputation may be damaged if you don’t carry liability insurance.

Business Owners’ Policies and Liability Insurance

Liability insurance is included in a business owners policy. A business owners policy is more comprehensive and includes:

  • General liability insurance
  • Protection for property damage

So, rather than having two separate policies, you can have one single policy to cover your business and premises. Contact InsurePro for free quotes.

Person working on office computer with an insurance benefit document on the screen

What Is a Business License?

A business license is a type of legal permit, document, or certificate. The license is issued at either state, federal, or local level. Once issued, it allows you to operate a business in a specific jurisdiction.

Who Needs a Business License?

There’s no general state requirement for a business to have a license to operate. That said, most businesses do require some form of license or permit to legally operate in a certain industry or area.

  • You need a business license if a federal agency regulates your industry e.g. agriculture or alcoholic beverages. 
  • Typically, you’ll need a license to work as a regulated professional such as a lawyer, doctor, or accountant. 
  • You may need a combination of licenses and permits in industries such as construction.

Do you need a license to get liability insurance, though? Let’s take a look.

Do I Need a Business License to Get Liability Insurance?

The answer to this question depends on two factors: the state you’re in and your industry requirements.

State Laws

If your state requires you to have certain licenses to operate, then you won’t get insurance without these permits. 

For example, most businesses in South Carolina need a business license. So, insurance carriers in the state will require you to have a license before they insure you. 

And in Washington, D.C., most brick-and-mortar businesses need a license to operate. Again, you won’t get liability insurance over such a business without the right permits in place.  

Type of Business or Profession

Sole proprietors may not need a business license, depending on their profession. If this is the case, you can get liability insurance without a business license.

Other regulated professionals may require a license to operate. In this case, they’ll need proof of licensing before they can be insured. As mentioned, if you’re regulated at the federal level, you must have a license in place before you’ll get insurance.

In short, you should have a business license if you need it at the local, county, state, or federal level. Business licenses help insurers determine what level of coverage you need – and how much your policy should cost.

How Do I Get a Business License for Liability Insurance?

The application process varies by state. You can ask a business attorney for advice, or check with your local Small Business Administration (SBA) office. Alternatively, check with licensing authorities in your area.

Where Can I Buy Liability Insurance?

The easiest way to get business liability insurance is by contacting InsurePro. At InsurePro, we understand what you need from insurance cover. We can help you decide what level of cover you need and what policy may be right for you.

We can match you with a competitive quote in minutes. Get a free business liability insurance quote today!