Risks Llcs Are Not Protected Against
Just being an LLC does not automatically protect your company against all potential costly risks. Here are just a few examples of common disasters that could strike your LLC that you would not be protected from without the right insurance.
- Customer slips and falls: You’d be responsible for paying lawsuit costs on top of medical costs if a customer slips and falls on your business premises, which is one of the top reported incidents for all businesses.
- Work-related injuries: Without the workers’ comp coverage provided by LLC insurance, you’d be responsible for paying for your employees’ medical costs after an injury or illness caused by your company.
- Employee car accidents: When using your company vehicles, your employees put your LLC at risk of further lawsuits. It’s imperative to have the commercial auto coverage in your LLC insurance if your company uses business vehicles at all.
These are just a few of the most common risks LLCs are not protected against without the proper insurance. Even if you’re not legally required to carry LLC insurance, you owe it to your company, and yourself, to have the right protection.
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What Does Llc Insurance Cover
An LLC insurance policy protects the liability-related details of operating a business by covering its owner and employees. The two most important types of coverage will be general and professional liability, but to make sure you cover all your bases, there are a few extra add-ons you may want to consider.
Key components of protection:
- Professional liability: Covers professional errors made by the business.
- General liability: Protects against lawsuits related to injury/property damage caused by the business.
- Workers’ compensation: Protects your employees against injury, illness, and death on the job.
Additional coverage to consider:
- Business owners policy :Coverage includes general liability plus property coverage. It protects your merchandise as well as your company against business interruption expenses and loss of income. BOPs also offer liability protection if someone’s hurt on your property.
- Commercial auto insurance: Covers any damage to, or theft of, the vehicles you or your employees use on the job.
- Inland marine insurance: Protects property, equipment and tools moving between job sites and the business.
- Commercial property insurance:Covers any damage to your physical office space.
An independent insurance agent will help you create an LLC insurance package that covers all the necessary bases of protection.
Bundle Insurance Policies To Save Money
LLC owners can save money on business insurance coverage with two packages common in the IT industry.
A business owner’s policy combines commercial property insurance with a general liability policy.
A general liability insurance policy is the coverage that most small business owners purchase first. It covers basic third-party liability claims, including bodily injury and property damage. The policy is especially beneficial for tech LLCs that invite the public into an office or storefront, handle delicate client equipment, or have an active social media presence.
Commercial property insurance is critical for protecting your work equipment and your building, if you own it. This policy is valuable even if youre renting an office space, as your landlords policy wont cover your companys belongings.
Technology errors and omissions insurance combines errors and omissions insurance and cyber liability insurance.
This policy is crucial for LLCs in the tech industry and professional services, as it covers the cost of lawsuits over the quality of your work, including any security recommendations. It bundles errors and omissions insurance with both forms of cyber liability insurance:
First-party cyber liability insurance helps your tech company recover from a data breach or cyberattack. It covers expenses like the cost of credit monitoring services, crisis management, and cybersecurity incident investigations.
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Do You Need A Business Owners Policy
If you are a small business owner, you may wish to consider a business owners policy . A BOP includes:
- General liability insurance
- Commercial property insurance
- Business interruption insurance, which helps you recover lost business income if your business is unable to open because of a problem such as a fire
A BOP is less expensive than buying separate insurance policies for this same coverage. So consider whether a BOP is right for you.
The Hartford: Best Specialized Insurance
The Hartford is a great insurance solution for businesses that need specialized insurance coverage. Though the insurance may not cover every type, as CoverWallet does, the fact that The Hartford offers customized insurance packages, leading to lowered rates, makes it one worth checking out. The Hartford has been around for over 200 years, serving millions of small businesses, and The Hartford has maintained a great reputation for delivering some of the best-specialized insurance coverages and rates.
Here is a quick summary of what The Hartford offers:
- Business Owners Policy
Read our full Chubb Small Business Insurance review.
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Best Business Owners Policy: Liberty Mutual
Liberty Mutual
For the fastest quote experience, call CommercialInsurance.net at 888-509-2650.
We chose Liberty Mutual as the best insurer for BOPs because the company has a fast and easy process with a streamlined business owner’s policy available for many different industries that combine coverage in one cost-effective policy.
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Quick and easy claim process that can be filed online or through an app
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24-hour claims assistance
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Policies serviced by independent agents
We chose Liberty Mutual as our best provider of business owners policies that combine multiple types of coverage into a single policy protecting against liability, property loss, and loss of income. Liberty Mutual is in a unique position to help large numbers of business owners, regardless of industry.
Liberty Mutual offers business insurance through independent agents across the country. The company has several types of coverage available including commercial auto, equipment breakdown, inland marine, umbrella coverage, and workers compensation, as well as 12 industry-specific solutions including construction, public entities, financial institutions, healthcare, real estate, and wholesale. Liberty Mutual also advertises 24-hour claims assistance through its nationwide contractor referral network.
Is Llc Insurance Mandatory By State
Yes and no. When it comes to insuring your LLC, youre free to decide whether you want to purchase insurance. But depending on the laws in your state, the type of business you have, and the type of service youre offering, you may be required to have some coverage.
Workers’ compensation is a necessity in nearly every state, along with unemployment insurance, and disability insurance. A local independent insurance agent can help you understand your state’s requirements and make sure you are covered in those areas.
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Personal And Advertising Injury Business Insurance
This type of business LLC insurance can help protect your company from the cost of a lawsuit if youre accused of personal injury or advertising injury, including defamation, false arrest, and invasion of privacy. This insurance is best for companies with a lot of contact with the public, like retail stores.
What Are The Benefits Of Carrying Llc Insurance
There are many benefits of carrying LLC insurance, but the biggest of which is protection against potential bankruptcy. LLC insurance can protect your company against expensive lawsuit fees and other expensive claims that you’d otherwise have to pay for yourself. Without LLC insurance, you could bleed your company’s funds dry after just one incident.
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How Do I Know If I Need Small Business Insurance
The vast majority of small businesses would suffer financially if they were sued or experienced a devastating loss, such as losing inventory in a fire. For those businesses, commercial insurance is a must.
Without small business insurance, youd have to pay for the legal costs of lawsuits and find a way to pay for damage to your business property. General liability insurance and commercial property insurance are good places to start. Commercial auto is important if you have cars, trucks or vans that you use for business.
And workers compensation insurance is required in most states.
General Liability Insurance Cost
In 2021, the national median cost of general liability insurance through Progressive was $48. The average price was $65.
Most customers find their monthly premium to be closer to the median price because expensive outliers often drive up the average cost. Your rate will depend on specific features of your business.
Discover more about general liability insurance cost, policy rating factors and money-saving tips to help you find the best combination between price and protection for your business.
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Let Us Help You With A Business Insurance Quote
We want you to feel confident and secure with your small business insurance. Heres just a few of the many reasons you should choose us to help you find the best insurance for your business.
Flexibility
We can help you secure coverage at any stage of your businesss development and offer the flexibility to adjust coverages as your business grows. Our agents will work with you to make sure youre getting protection that meets both your needs and budget.
Convenience
We offer several ways to get customized business insurance. You can start a quote online, by phone, or through a local agent. Updating your policy is easy, and we can usually activate your request the same day you make it.
Expert Support
As an experienced business insurance provider and the #1 Commercial Auto Insurer in America*, you can be confident in our support. Our team of specially trained, in-house agents can help you every step of the way to make sure youre getting the best coverage for your business today, and tomorrow.
Best For Independent Contractors: Hiscox
Hiscox
For the fastest quote experience, call CommercialInsurance.net at 888-486-1756.
Hiscox wins the top spot for independent contractors because they have products designed and priced specifically for independent contractors and freelancers.
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Small business coverage in 49 states and Washington, D.C.
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Policies designed for micro-business needs
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Parent company is not U.S.-based
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Small business coverage not available in Alaska
Hiscox was started in 1901 as an underwriter in Lloyds market. Although the parent company Hiscox Group is based in Bermuda, the U.S. corporate headquarters is in Atlanta, Georgia and operates in nine offices across the country. Hiscox does business in 14 countries and all 50 states, plus the District of Columbia, although it’s small business insurance is not available in Alaska.
Hiscox offers a core lineup of business insurance products including commercial general liability, professional liability, business owners policies , workers compensation, cyber liability, commercial auto, and employment practices liability insurance . The company also writes all the business insurance policies sold by GEICO.
Hiscox offers standard liability coverage limits up to $2 million, but higher limits are available upon underwriting approval. The company boasts coverage for many industries and policy types. Customized solutions are available for 180+ different industries including salons, fitness instructors, consultants, therapists, janitors, and acupuncturists.
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What Does Small Business Insurance Cover
Heres a closer look at top coverage types for small businesses.
General liability insurance pays for legal costs such as hiring an attorney and any judgments against you and your business. General liability insurance includes coverage for damage to reputation such as slander or libel and copyright infringement.
Liability insurance pays others, not your own business. Its also known as business liability insurance.
Commercial property insurance covers a number of business items including computers and workstations, desks and chairs, business records, business inventory and supplies. Commercial property insurance can also cover a businesss office and business building.
Commercial property insurance is also called business property insurance.
Workers compensation insurance offers several benefits to employees who are sick or injured because of their jobs. This includes medical care, physical therapy and compensation for lost wages. Death benefits for an employees family are available if an employee passes away from a work-related illness or injury.
Businesses buy workers comp insurance for employees and this insurance is required in most states.
What Insurance Do I Need For My Small Business
The insurance that you need for your small business depends on what type of business you have and your specific risks. However, almost all businesses need general liability insurance, which protects you in case a customer gets hurt at your place of business.
Some other types of small business insurance that you may need include:
- Commercial property insurance if you own or lease property for your business
- Workers compensation insurance if you have employees
- Professional liability, also called errors and omissions , for professional service providers such as an architect, accountant, consultant, or lawyer
- Commercial auto insurance if you use vehicles for business purposes
- Inland marine insurance if you transport inventory or equipment
In addition to these core types of business insurance, there are many other types of coverage that business owners may need to cover risks, such as cyber insurance or employers’ professional liability insurance, that are specific to the company or its industry.
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General Liability Insurance For Llcs
If LLCs can afford one business insurance policy only, they should definitely buy general liability insurance. The general liability insurance policy will protect LLCs from law suits in which the business is sued to have caused property damage and bodily injury.
Without general liability insurance, the LLC is still at risk in the law suits. Its assets such as account receivables, property, inventory, equipment, etc. might be liquidated to pay for all expenses related to the law suits.
Sometimes your personal assets may be at risk in these law suits if you dont separate personal and business assets clearly enough, even you already formed an LLC. A general liability insurance will protect your LLC business and your personal assets from these potential risks.
It is relatively easy to find a reasonable general liability insurance policy for an LLC, any business insurance companies should offer it. Below are a few options for your consideration:
A good general liability insurance policy for LLCs usually costs, on average, $42 a month or $500 a year.
> > MORE: General Liability Insurance for LLCs: Costs and Providers
Is Llc Insurance Required By Law
It’s possible LLC insurance is required in your area. Depending on the laws in your state, the type of business you have, and the type of service youre offering, you may be required to have coverage. Workers’ compensation is required in most states, along with unemployment insurance and disability insurance.
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What Is General Liability Insurance
When you start a business, it is recommended to get general liability insurance coverage. General liability insurance coverage can protect your LLC if someone is injured on your businesss property, and it covers damage caused by you or your employees. The policy will cover your legal defense and the costs associated with the loss if you are found liable, up to the stated limits of your policy.
General Liability Insurance Definition
General liability insurance is a type of commercial liability insurance policy that protects a business from the financial burden of claims arising from bodily injury, personal injury, or property damage.
Risks typically covered by a General Liability Business Insurance policy include:
- Property damage
- Medical payments
- Personal liabilities
- Advertising liabilities injury
- Legal defense and judgment
Do I Need Business Insurance For My Llc
Yes, your LLC needs its own special protection against lawsuits and more. LLC’s themselves are not exempt from liabilities and other risks, contrary to popular belief.
Your LLC, by itself, is not protected against the following disasters:
- Your business pays taxes incorrectly
- One of your clients or another third party gets injured by your business in some way
- An issue arises with your business’s loan or you accrue debt
- Your business commits fraud
- Your actions damage the company in some way
- You commit malicious acts against the company or a third party
While some of these behaviors are optional, your LLC can always be sued, even if you’re on your best business behavior. An independent insurance agent can further explain the importance of protecting your LLC with the right insurance.
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What Type Of Insurance Does An Llc Need
General liability insurance for LLCs can help to provide financial protection if an accident occurs at your business, such as a customer injury or damage to someones property.
Bodily injury
Sometimes liability insurance is called slip and fall insurance. This is the part of your policy that would help protect your business if a client falls down the stairs at your office and breaks their arm.
Property damage
General liability also covers property damage to items that dont belong to you. If you accidentally break a clients window, your insurance will cover repair expenses up to your policy limit.
What Does Small Business Insurance Not Cover
There are instances where small business insurance doesnt offer coverage, such as:
- Flood damage to your business. You would need to have a separate commercial flood policy for flood coverage
- Fraudulent and intentional acts
- Wrongful termination, unless you have an employment practices liability policy
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Do You Need Llc Small Business Insurance
In some high-risk industries, like agriculture, construction and manufacturing, LLC small business insurance can be a must-buy. But even in low-risk industries like freelancing, bookkeeping and other home-based businesses, LLC insurance is still highly encouraged.
The future is full of unknowns, and you never know when a thief may steal your laptop, an artist may sue you for copyright infringement or a client may take you to court for breaching a service contract.
Many businesses operate for years without being sued, but if you are sued, the payments requested by attorneys can be catastrophic, says Nelson.
Think of it like this: If you dont have the money to replace expensive equipment or fight a lengthy court battle, you need some type of LLC small business insuranceeven if its just a professional or general liability policy.