How to Choose General LLC Insurance for Your Small Business
November 4, 2022 | Last Updated on: January 27, 2023
November 4, 2022 | Last Updated on: January 27, 2023
Limited Liability Company (LLC) insurance is an essential part of protecting the business you’ve worked so hard to make successful. Business insurance for LLCs helps protect you against incidents related to operating your company. Without it, you must pay out of pocket for things like business property damage, employee and customer injuries, theft, lawsuits, and more, which can be very expensive.
This article answers frequently asked questions about LLC business insurance.
LLC insurance helps protect businesses from liability claims, including bodily injury or property damage, related to your business.
Many small businesses are structured as LLCs. This separates business assets from your personal ones. If you’re sued for business reasons or default on company debt, it’s less likely that your personal money, investments, or property could be seized as an LLC. However, it doesn’t protect your business from many of the risks it faces. LLC insurance can help pay expenses related to these risks. In some circumstances, LLC business owners may be required to purchase certain coverages.
It’s a smart idea to have business insurance for your LLC. Without coverage, you have to pay out of pocket to cover costs for business-related personal injuries, property damage, theft, and more. Most small business owners cannot cover these unexpected costs, which are often large enough to put them out of operation. The specific coverage you need depends on the type of small business you run and the risks it faces.
Be aware that many LLCs may be required to have certain types of business insurance. For instance, most states require businesses with employees to carry workers’ compensation insurance. Most landlords and lenders make you get commercial property insurance if you rent a business location from them or take out a business property loan.
If you work in certain professions like medicine, you may need to get professional liability insurance, which:
If you’re not sure what insurance protection you need, consult with a business insurance agent or company representative.
LLC insurance provides coverage to help protect your business from financial losses. Two essential types of coverage for most LLCs are general liability and professional liability insurance.
Mistakes can happen at even the most by-the-book limited liability company. And those mistakes can be costly, especially if you’re sued. That’s why it’s critical to get adequate professional liability (also known as errors and omissions insurance or E&O) protection for your business. It helps cover you and your LLC if a customer sues you for making a mistake in the professional services you provide.
Example: Imagine that you own an accounting business and you make a math mistake. The error causes your client to pay thousands of dollars in fees and penalties. They sue your company over the incident. Professional liability insurance can help cover your legal and settlement costs.
General liability insurance policies, often referred to as business liability insurance, protect you if someone other than an employee is injured on your business property, or you damage someone else’s property while conducting business. If you don’t have this coverage, you’d have to pay for medical costs and to replace or repair property out of pocket, which can be costly.
Little known fact: General liability insurance will cover legal and settlement costs if you’re ever sued for libel or slander or over certain types of advertising errors.
Example: If a customer slips and falls on a wet floor at your business location and breaks an ankle, general liability coverage will help pay his medical costs resulting from the incident.
Example: While an employee is making a delivery to a client’s house, she breaks an expensive vase. Your general liability policy will pay to repair or replace the vase.
Many limited liability company owners purchase the following coverages to meet their insurance needs:
Consult with an experienced business insurance professional to go over your coverage options to determine all the protection required to meet your business needs.
Insurance costs vary because every small business is different and has unique coverage needs. Insurance companies look at various factors to determine a business’ LLC insurance cost. This can include your:
Another big factor that impacts business insurance prices is the insurance provider and their policy underwriting practices. The same insurance from different companies could come with vastly different prices.
The best way to lower your LLC insurance cost is to reduce risks. If possible, take advantage of risk-reduction programs offered by most business insurers. They will help you create a safer workplace, implement more secure work practices, provide tips on how to drive safely, and more.
Here are a few additional ways limited liability company owners can save on the cost of small business insurance:
Leveraging all the information in this article will help you get the right LLC business insurance policies to protect your operation.