LLC Insurance

When starting a new business, the simplest way to protect your personal assets is to form an LLC. Forming an LLC separates your business activities from your personal assets. The major benefit of this separation is that if your business is sued, your personal assets (like your home and savings account) will be protected.

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But what about your business assets? If your business is sued, the LLC does not protect the assets of your business (your business’s bank accounts, property, inventory, etc…). So what will protect your business in the event of a lawsuit? LLC Insurance!

Find out what the real cost of LLC insurance is for your business. Get a free quote


What Is LLC Insurance?

The term “LLC insurance” itself is a bit of a misnomer. When someone says “LLC insurance”, they could actually mean one of a couple of different things:

  • The protection provided by the LLC business structure - limited liability protection
  • Liability insurance held by your LLC

Limited Liability Protection

The first definition is the protection that the LLC business structure provides: limited liability protection. As mentioned earlier, forming an LLC creates a separation between your business and you personally.

Limited liability protection is what protects your personal assets from any outcome of a lawsuit against your business. 

Along with the LLC structure, you will also need to ensure that your personal and business finances are completely separated. This keeps from your assets becoming “commingled”, which can damage your limited liability protection. 

If you haven’t yet formed an LLC for your business, this is the first step that we recommend to all new business owners.

Form your LLC now.

Liability Insurance For LLCs

The second definition of “LLC insurance” is the insurance policies that your LLC holds to protect against specific liabilities.

Whereas the LLC protects your personal assets, business insurance protects your business’s assets. Together, they work in tandem to ensure that you and your business are financially protected in the event of a loss or a lawsuit.

There are several different types of insurance policies that your business may need to be fully protected. The best way to ensure that you’re getting the proper protection is to speak to an insurance agent. They will work with you to understand your business, its vulnerabilities, and the policies that will best suit your needs.

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Ready To Protect Your Business?

The best way to ensure that you’re getting the proper protection at the best price is to speak to a business insurance agent and get a quote.

Get Your Free Quote

What Does LLC Insurance Cover?

As mentioned earlier, there are many different types of insurance policies that LLCs can carry to properly protect their business assets. Below, we’ll cover the basics of a few of the most common types of business insurance policies.

Professional Liability Insurance for LLCs

Professional liability insurance is a common insurance policy for businesses that specialize in giving “professional advice” to their clients. It’s also known as “errors and omissions” coverage.

It often comes into play when an error is made by the professional which results in a loss to another party.

Example of professional liability insurance: A real estate agent measures a house to be 1,500 square feet, then sells the house for $150,000. When the buyers move in, they remeasure the house and find it to only be 1,300 square feet. It’s possible that they could sue the real estate agent for the perceived price difference based on the misrepresentation of the size of the house. 

Professional liability insurance would offer financial protection to the real estate agent for the resulting lawsuit.

Learn more about professional liability insurance.

General Liability Insurance for LLCs

General liability insurance is the most common of all business insurance policies. It protects your LLC from the financial burden of claims arising from bodily injury, personal injury, or property damage.

Businesses are often required to carry a general liability insurance policy to participate in basic operations such as: renting office space, bidding on a contract, performing services on client premises, etc…

Example of general liability insurance: A grocery store has a leaking freezer, which creates a puddle on the floor. A customer slips and falls on this puddle, fracturing their wrist. The customer sues the grocery store for the costs they incur from their injury.

General liability insurance would offer financial protection to the grocery store to cover the costs of the lawsuit.

 

Learn more about general liability insurance.

Business Owner’s Policy for LLCs

A business owner’s policy is a collection of coverages wrapped into a single insurance policy to protect an LLC from the most common types of liabilities.

The standard policies wrapped in a BOP policy are general liability insurance, property insurance, and business interruption insurance. Depending on your agent and the insurance company writing the policy, they may be able to add more policies into your BOP based on the type of business you operate. 

The major benefits of a business owner’s policy are lower cost and simplified management of your insurance policies. If you’re shopping for insurance for a new business or LLC, a BOP is what you should look for first.

Learn more about business owner’s policies.

Does Your Business Need LLC Insurance?

The simple answer to this question is: yes, your business needs to be protected. The question that is more valuable is this: what type of insurance does your business need?

The types of insurance that your LLC carries are almost totally dependent on the kind of business you operate. For example, an ice cream parlor has vastly different vulnerabilities and insurance needs than a general contractor. Therefore, the two would carry different policies.

Common business insurance policies include general liability insuranceprofessional liability insurance, and commercial property insurance, but there are many more types of policies for more specific needs. For most small businesses, a business owner’s policy will combine the proper coverages into one policy, meaning lower insurance costs and simple management. 

When you speak to an agent, they will guide you in the proper direction and quote you a price for the policies that you need.

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How Much Will Insurance Cost You?

Different businesses have different liabilities, and therefore different insurance needs. Talk to an agent to get an exact quote on what insurance will cost for your LLC.

Get Your Free Quote

How Much Does LLC Insurance Cost?

Similar to the question of “which policies”, the answer to “how much” will be totally dependent on your type of business. Other factors that play into the overall cost of an LLC’s insurance are:

  • Location
  • Type of work conducted
  • Number of employees
  • Number and type of business owned vehicles

 

Overall, the average total cost of insurance for an LLC is between $700 and $3,800 per year. Obviously, this is a large range, but most businesses fall somewhere between these totals. Your price will vary depending on the factors mentioned above.

To find the actual cost of LLC insurance for your business, just get a quote.

Does Your Business Need LLC Insurance?

As mentioned earlier, there are many different types of insurance policies that LLCs can carry to properly protect their business assets. Below, we’ll cover the basics of a few of the most common types of business insurance policies.

Professional Liability Insurance for LLCs

Professional liability insurance is a common insurance policy for businesses that specialize in giving “professional advice” to their clients. It’s also known as “errors and omissions” coverage.

It often comes into play when an error is made by the professional which results in a loss to another party.

Example of professional liability insurance: A real estate agent measures a house to be 1,500 square feet, then sells the house for $150,000. When the buyers move in, they remeasure the house and find it to only be 1,300 square feet. It’s possible that they could sue the real estate agent for the perceived price difference based on the misrepresentation of the size of the house. 

Professional liability insurance would offer financial protection to the real estate agent for the resulting lawsuit.

Learn more about professional liability insurance.

General Liability Insurance for LLCs

General liability insurance is the most common of all business insurance policies. It protects your LLC from the financial burden of claims arising from bodily injury, personal injury, or property damage.

Businesses are often required to carry a general liability insurance policy to participate in basic operations such as: renting office space, bidding on a contract, performing services on client premises, etc…

Example of general liability insurance: A grocery store has a leaking freezer, which creates a puddle on the floor. A customer slips and falls on this puddle, fracturing their wrist. The customer sues the grocery store for the costs they incur from their injury.

General liability insurance would offer financial protection to the grocery store to cover the costs of the lawsuit.

Learn more about general liability insurance.

Business Owner’s Policy for LLCs

A business owner’s policy is a collection of coverages wrapped into a single insurance policy to protect an LLC from the most common types of liabilities.

The standard policies wrapped in a BOP policy are general liability insurance, property insurance, and business interruption insurance. Depending on your agent and the insurance company writing the policy, they may be able to add more policies into your BOP based on the type of business you operate. 

The major benefits of a business owner’s policy are lower cost and simplified management of your insurance policies. If you’re shopping for insurance for a new business or LLC, a BOP is what you should look for first.

Learn more about business owner’s policies.

Ready to Protect Your Business?

General Liability Insurance is a foundational coverage for your small business or LLC.

Find out what it will cost to protect your business today.

Get Your Free Quote

Frequently Asked Questions

Do I need LLC insurance?

Yes. While the LLC business structure protects your personal assets, it’s also necessary to get LLC insurance coverage to protect your business assets.

How much does LLC insurance cost?

The insurance you need for your LLC depends on the type of business you operate. The average cost of LLC insurance typically ranges between $700 and $3,800 per year. Costs will vary depending on factors, such as location, type of work, number of employees, type of insurance policy, and more.

Get a free quote to find what insurance will cost for your LLC

How does LLC insurance work?

An LLC separates your business assets from your personal assets. However, the LLC's limited liability protection doesn't exempt your business from potential risks it may encounter. Getting business insurance protects your LLC against certain liabilities that might put your business at risk, such as accidents or lawsuits.

What does LLC insurance cover?

LLC insurance is actually a combination of the different types of insurance policies that your LLC needs. The most common types of policies are general liability insurance, professional liability insurance, and business property insurance. You can learn about all of these different types of insurance and more on our Business Insurance article.

What are the benefits of getting LLC insurance?

Different types of LLC insurance can protect you and your business in many ways. Depending on the policy, they can:

  • minimize your financial losses
  • protect your business if certain claims arise
  • protect your business from unexpected events, such as property damage from natural disasters
  • cover your employee’s medical care or replace lost wages
  • cover the costs for equipment and repairs
  • position your business as credible and trustworthy

What type of LLC insurance policy does my business need?

The type of LLC insurance you need depends on the type of business you own and operate. Some common insurance policies are professional liability insurance, general liability insurance, and business owner’s policy.

What are the additional coverages to consider with LLC insurance?

Most states require LLCs to have certain types of coverage. These include workers’ compensation insurance, unemployment insurance tax, and disability insurance, among others.

Additional policies that your business may need include product liability insurance, commercial property insurance, commercial vehicle insurance, cyber liability insurance, and so on.

What happens if I don't have LLC insurance?

Without proper insurance coverage, your LLC is vulnerable to potential business risks and financial losses. Also, most states require that an LLC business gets some type of insurance policy, like workers’ comp coverage. Not having a state-required insurance policy in place gets you penalized. Penalties and fines vary from state to state.