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Do I Need Insurance for my LLC?

Do I Need Insurance for my LLC?

Before jumping into LLC insurance, I want to do a quick review of LLCs. An LLC or a Limited Liability Company is a lightweight, hybrid structure. It combines some of the best features of a partnership and a corporation. Like corporations, every type of LLC provides limited protection against personal liability. For a single-member LLC, all profits and losses of the business are reported on the owner’s personal income tax return. For multi-member LLCs, they are reported on every member’s personal income tax return. 

What is LLC insurance and why do I need it?

LLC insurance helps protect your business from different liability claims like bodily injury or property damage caused by your business, products, or employees. If you don’t have insurance for your company you will need to pay out to cover these claims which can be very expensive. 

Business LLC insurance or professional LLC insurance:

Business LLC insurance, otherwise known as general liability insurance can help you protect yourself from claims that your LLC caused bodily injuries or damaged someone else’s property. 

So if an employee gets into an accident while driving a load and gets injured, your business liability insurance can help cover their medical expenses. If you didn’t have insurance you would have to pay out of pocket for their medical bills. 

If you say something that can damage someone’s reputation, they can sue your business for libel or slander but business insurance can cover that as well. 

Business liability insurance isn’t typically required by law. It is very good to have it though because it helps protect your business. Anything liability claims can happen at any time.

Professional LLC insurance:

Professional liability insurance also known as errors and omissions coverage or E&O coverage,  helps protect your business if a customer sues you for making a mistake in the professional services given. This insurance will cover any legal costs related to a claim made by someone that wants to sue your company for a mistake that you or one of your employees made.

Do you need insurance for your LLC?

Business insurance is not required by law. You are not legally required to have it but it is recommended to have it in case of claims such as bodily injuries (medical expenses), property damage, or if someone wants to sue you for libel or slander. If you don’t have insurance you might end up having to pay expensive fees out of your own pocket if anything were to go wrong. 

What does LLC insurance cover?

Business owners’ policies for LLCs are great insurance packages for small businesses. There are a lot of things that it covers. This bundle covers:

Accidental employee injuries

Legal costs, judgments, and settlements if you’re sued

Accidental property damage

Additional coverages to consider with your LLC business insurance would be:

Workers’ compensation insurance: This gives benefits to your employees to help them recover from a work-related injury.

Commercial auto insurance: This covers medical expenses if an employee gets into a car crash in a company-owned vehicle. It also covers property damage (for the truck).

Business income insurance: If your property is damaged and can’t open, this insurance will help cover your lost income.

Commercial property insurance: This covers your owned or rented physical location and the tools and items that you use to operate.

How much does LLC insurance cost?

The average cost for LLC insurance for a small business is around $57 a month. Your LLC insurance cost will vary depending on factors such as:

Business type

Size of your business

Location of your business

Number of employees

Payroll

Business assets

The years of experience your business has

The amount of coverage you buy

Your insurance claims history

There are insurance deductible amounts that you should take into consideration as well. The best way to find out the cost of LLC insurance for your company is to request a quote from an insurance agency.

How do you get LLC insurance?

Figure out how much insurance coverage you need. Make sure you think of anything that could happen in your company because you don’t want to be paying a bunch of medical bills out of your own pocket.

Once you know what you want, do some research into what insurance companies offer and how much their insurance coverage plans are, to see if that is a good price for you.

Make sure that you get the insurance that covers all of the bases because you might need several different coverage types. A bundle package would be best because it could save you a lot of money instead of buying multiple different policies from different insurance companies.

After following these steps, request a quote and make sure you have all of your LLC information ready. Such as contact information, business location, type of business, estimated business revenue, and the number of employees you have. Make sure to look back at your policy every time something changes within your LLC, such as the number of employees you have, or you move locations. You don’t want to be paying more than you need to for your insurance policy.

Written by Tessa Braybrook

Tessa joined Superior Trucking Payroll Service in September 2022. She loves to write and make videos which made her a great asset to the team in her marketing position. 

Before working at Superior Trucking Payroll Service she worked in IT at GVSU which gave her the skills to problem-solve with customers over the phone.

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