What is The Right LLC Insurance for Your Business?

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What is LLC Insurance?

Most business enthusiasts opt to build an LLC, or Limited Liability Corporation, rather than a corporation or sole proprietorship. The most common reason for this is that an LLC protects the personal assets of the owners in case of business liability claims or legal charges. An LLC separates your personal possessions such as your house, vehicle, investments, etc. from your business assets.

While this corporate structure is gaining massive popularity amongst smart business owners, LLCs are still subject to various financial risks and challenges. Hence, the need for LLC Insurance.

LLC Insurance is a type of coverage that protects LLC companies explicitly against certain liabilities that might compromise the financial aspect of the business such as lawsuits or accidents. And just like other policies, it has many forms to cater to the varied and diverse needs of LLCs.

Do you need Business Insurance for an LLC?

Even if your personal assets are separated from your business estate, every company, regardless of trade, needs to have an LLC Business Insurance. Keep in mind that LLC Insurance doesn’t provide 100% protection, and some gaps might put your finances at risk; this is where an insurance policy becomes extremely handy.

It is a common misconception that LLCs are exempt from various threats and liabilities. Though, do note, that there are limited liability exceptions applicable for all businesses under this structure. This means that even if your small business is registered as an LLC, the following circumstances will NOT protect you from having liabilities:

  • You personally injured someone
  • You don’t pay business taxes correctly
  • You engaged in a fraudulent or reckless behavior
  • You acted irresponsibly causing damage to the company
  • You intentionally commit negligence or crime
  • You mix business accounts and personal expenses
  • You have personally guaranteed a loan or debt

Some might think that the circumstances mentioned above are avoidable, and they are, but getting lawsuits and accidents are not. Just think about the costly process of filing countercharges, hiring attorneys and handling every legal procedure. The same principle applies to disasters that might strike without warning. If you want to protect your business, obtaining the right LLC Business Insurance coverage is the key towards a secured and successful company.

What kind of liability coverages exist for an LLC?

There are many types of liability insurance for LLC. Depending on your company needs, risk level, and tolerance, sure there’s a right program specifically tailored for your business.

General Liability Insurance

Provides broad coverage of protecting your business from various liabilities such as injury or accident claims, property damage and false or misleading advertisements. It helps pay for medical expenses, legal costs and court settlements with regards to the incident.

Product Liability Insurance

If your business deals with manufacturing or selling products, this insurance covers you from product claims resulting in injury or property damage. If someone files legal charges against you due to a faulty product, the insurance company takes care of it, so you don’t have to worry.

Professional Liability Insurance

For those dealing with professional services or giving professional advice, this policy will help protect you against liabilities associated with malpractice, errors, negligence, and omissions. Medical practitioners, financial firms, and law offices are highly advised to obtain this insurance.

Directors and Officers Liability

Also known as “D & O,” this policy offers protection to company directors and officers in case of wrongdoings or accusations. If a lawsuit is filed against one of your directors or officers, it helps pay for legal costs and specific damages depending on the liability coverage.

Property Damage Insurance

Another liability insurance for LLCs is Property Damage. This policy protects your business property against damages or loss resulting from natural calamities or human-made disasters. Subject to the extent of coverage, it may include theft, vandalism, flood and other uncontrollable events.

Workers Compensation Insurance

A state-mandated program, workers compensation is required for all types of businesses regardless of classification. It helps protect your business from medical expenses, rehabilitation costs and lost wages if an employee becomes sick or injured while doing his job.

Depending on the area your business operates, not all states require LLC companies to carry a specific Business Liability Insurance. Take Workers’ Compensation as an example where certain states require it for those with more than three employees while some areas are stricter that it applies to all, regardless of the number of workers. Other liability insurance for LLCs where you need to check your local government regulations are Disability Insurance and Unemployment Tax Insurance.

Still not sure what you need?

Head on over to CoverWallet’s Insurance Checklist. There you’ll find a list of insurance types needed for your industry.

How much does LLC Insurance cost?

The LLC Insurance cost varies depending on your business and the types of coverage you wish to acquire. Most insurance companies compute premiums based on your payroll, your business location (whether you are in a litigation-prone industry), your total number of employees, your products or services, and claims history.

It is best to compare LLC Insurance cost from different providers before finalizing a contract. Your small business might only need to pay a couple of hundred dollars per year for primary coverage while bigger LLCs are expected to shell out huge amounts of a sum for diverse protection. Though, make sure to deal with trusted insurance providers to avoid problems when filing for claims and damages. Fill our form out now and get business insurance with optimized coverage to meet your exact needs!

Business Insurance

Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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