Can You Get Business Insurance Without a License?

Getting business insurance is an important step for any new or growing company. But what if you don’t have a formal business license yet? Here’s what you need to know about getting insured without a license.

What is Business Insurance?

Business insurance refers to various types of coverage that protect your company against losses and liabilities. Some common types include:

• General liability insurance – Covers claims of bodily injury or property damage caused by your business operations or products.

• Professional liability insurance – Also called errors and omissions (E&O) insurance. Protects against claims alleging your services were inadequate or negligent.

• Property insurance – Covers damage to your business property due to events like fire, theft, or extreme weather.

• Workers’ compensation – Pays for medical care and lost wages of employees injured on the job. Required in most states.

• Commercial auto – Covers vehicles used for business purposes.

• Cyber insurance – Protects against data breaches, hacking incidents, and digital threats.

• Business interruption – Replaces income lost due to disasters or other events that disrupt operations.

When is a Business License Required?

Licensing requirements vary widely depending on your location and industry. Some instances when a formal business license may be mandatory include:

• Your business is located within city limits that require all companies to register.

• You operate a heavily regulated business like financial services, healthcare, alcohol sales, etc.

• Your state requires certain professions to hold licenses such as contractors, accountants, lawyers.

• You need local permits and zoning approval to legally operate your type of business.

• Your business name must be registered with the state before opening.

However, many small and online businesses can operate without an official business license. Sole proprietors and freelancers rarely need one unless required by their city or industry.

Getting Insured Without a License

The good news is you can still get business insurance coverage without holding a formal business license. Some tips:

• Shop around – Not all insurance companies will ask for a license upfront. Compare quotes from multiple providers.

• Highlight experience – Without a license, emphasize your qualifications and years in business on the application.

• Incorporate later – You can apply as a sole proprietor now and then add a business entity like an LLC later.

• Provide other docs – Submit alternative paperwork like your EIN, permits, business tax ID that prove you operate a real business.

• Apply as “pre-license” – Some insurers will write a policy pending you get licensed within 30-90 days.

• Ask your agent – Discuss your situation with an insurance agent to find companies flexible on licensing.

When to Get a License Before Insurance

In some cases, you may need to get licensed first before an insurer will cover your business. Common scenarios include:

• Your business is in a heavily regulated industry like finance, medical, or legal services.

• You operate in a geographic area that requires all businesses to be licensed.

• You need a specialized permit or license specific to your profession, like architects, engineers, chiropractors, and more.

• The insurer’s application asks for a license number or copy of your license.

• Your business is a corporation, LLC, partnership or other formal legal entity.

If licensing is unavoidable in your situation, take steps to register your business as soon as possible. Then you can immediately apply for insurance once approved.

Partner With an Insurance Agent

Getting insured without a formal business license may take some extra effort. That’s why it helps to work with an experienced insurance agent. They can advocate for your business and find an insurer who will work with you even without a license.

An agent can also advise you on the types and amounts of coverage that make sense for your current operations. They’ll guide you through the application process and help explain any paperwork requirements.

Partnering with an agent gives you an expert on your side as you navigate the insurance process without a business license. They have relationships with multiple insurance companies and know how to get you affordable coverage.

Conclusion

Although a formal business license is not always required, you can still get necessary insurance coverage without one in most cases. Be prepared to provide alternate documents that show your legitimate operations. If your state or industry does mandate licensing, take steps get licensed as soon as possible. Connecting with a skilled insurance agent will make the process much easier.