Can I Get Liability Insurance Without A Business License?

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General Liability Insurance and Licenses: How They Connect

General liability insurance assists in the coverage of the immense costs that come up when a claim is filed against your business.

It minimizes the impact on you, the business, your physical property, and your employees. Without general liability insurance, your business is at the risk of default. This is because your out-of-pocket costs are immense. They include settlement payments, court fees, and costs connected to legal services.

Most states require you to obtain general liability insurance for your company. Additionally, many insurers ask for a business license to provide you with a policy. This begs the question if liability insurance is attainable if you don't have a business license.

General Liability Insurance Covers for Small Businesses

What is general liability insurance coverage? Its scope handles a variety of situations. Below are five of the key risks covered under a general liability policy, together with corresponding general liability lawsuit examples

Getting Your Business License

Definition: Business License

A business license represents the legal registration of your company and its services. Approval permits you to not only operate but also provide services in a designated region. This can be a local community or within the state as a whole. The lack of a business license results in fines, warnings, and requests to close from the local authorities.

How You can apply for a business license

City and county governments have the license application available online or through an in-person visit. In certain situations, you're asked to file your organization at the state and federal levels as well. Regardless, licensing and filing fees are normally connected to an application.

What happens after your license is approved?

Once approved, your business license and subsequent ID number let customers know you are compliant with government regulations. In turn, you're entitled to any protections offered by them. Additionally, an approved business license allows you to purchase general business liability insurance.

Cyber insurance

Can You Purchase Liability Insurance With No Business License?

The simple answer to this question is yes. The more complex response is it depends on two factors: your business type and the state regulations in your jurisdiction.

1. Your Business type

If you are a sole proprietor of your company, you don't necessarily require a license to obtain a liability insurance certificate. At this point in entrepreneurship, you're the only person in your company. Thus, an insurer should provide you with the necessary coverage.

The same goes if you have established a limited liability company (LLC) connected to your business. This is a level below a business license. You are still registered with the state where your company resides. However, you normally don't require items like commercial insurance or tax breaks.

When you establish an LLC, you receive a form of liability protection not related to insurance. Depending on your state's shield laws, you're protected from some or all responsibility for acts and debts of the LLC.

This doesn't happen if the onus of blame is put on you as a sole proprietor. In either case, general liability insurance is a must to cover potential fees and settlements.

2. State regulations

Whether or not you can purchase a general business liability insurance policy with no business license depends on the regulations of your jurisdiction.

If you're a sole proprietorship or LLC, city or county governments might not require it. This is especially true if you don't have a brick-and-mortar business or employees.

On the other hand, if you run a real or virtual storefront business with employees that provide goods and services, then a business license is a must. It's the only way you can legally operate and avoid fines.

Plus, it permits you to purchase additional policies for workers' compensation and your commercial property.


How Do You Know If You Need a Business License to Get Insurance?

The best thing to do is contact one of our agents. They have the research tools needed to help determine if your business requires a license to proceed with a policy.

Additionally, they help you determine the liability insurance minimum you need with or without the official approval of your state or county.

In the end, don't go without any insurance if you can't get a business license. Contact our CoverWallet agents for more information on your best course of action and how much your liability insurance small business cost will be.

It will keep your business going if liability problems arise.


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