No matter if you run an LLC, sole proprietorship, or corporation, you can get important liability coverage from your company insurance. Many companies sign up for insurance as soon as they start doing business – a wise investment that could raft the company through trouble.
Think for a minute about what happens when a company opens its doors to the public. The company interacts with clients, customers, and vendors each day. At any given moment, something could go wrong. A delivery person could slip on the company's walkway. A client could complain about the quality of the company's work. An employee could suffer an on-the-job injury.
Any of these mishaps could become your liability – which means you are legally responsible for making up the injured party’s loss. Liabilities lead to lawsuits and the hefty legal bills that come with them. It's not uncommon for personal injury lawsuits to cost hundreds of thousands (if not millions) of dollars. But there's some good news.
Company liability insurance protects you from having to pay for a lawsuit out of pocket. There are a few different types of coverage that small businesses tend to buy. Let’s go over each common insurance policy and what it covers.
What Company Liability Insurance Do I Need?
Sole proprietors, small companies, and partnerships generally invest in a combination of the following liability insurance policies:
- General Liability Insurance. This covers third-party lawsuits (those coming from people outside of your company) over slip-and-fall accidents, product liability, property damage, and reputational injuries.
- Professional Liability Insurance (Errors and Omissions Insurance). This liability insurance covers lawsuits over errors or problems with the quality of your work.
- Workers' Compensation Insurance. This covers medical costs and partial salaries of injured employees. Workers' Comp policies with Employer's Liability Insurance also cover employee injury lawsuits.
- Employment Practices Liability Insurance. This protects your small business from employee disputes over discrimination, harassment, unpaid overtime, and other employment issues.
- Cyber Liability Insurance (Cyber Risk or Data Breach Insurance). This covers the high cost of data breaches.
Why Do I Need Company Liability Insurance?
There are many reasons to protect your company with commercial insurance. You should invest in coverage if...
- Your company could face a lawsuit.
- A business contract requires Errors and Omissions Insurance.
- A rental lease requires General Liability Insurance.
- You hire employees and need to meet your state requirements for Workers' Compensation Insurance.
Best of all, it's an affordable to way to protect your business's assets (and even your own personal savings) in the event of an expensive lawsuit. See our small business insurance cost analysis to get an idea of what you might pay in premiums.
Is Company Insurance the Same for LLCs, C Corps, S Corps, Etc.?
Depending on your business’s structure, there might be small variations in your coverage needs.
- Workers' Compensation laws in some states don't require LLCs to cover business partners with Workers' Comp coverage.
- Larger organizations (typically C corporations) may need policies with higher coverage limits than, say, sole proprietorships.
When you fill out an application, your insurer asks for details about your business, including what type of company it is. An insurance agent can find appropriate coverage, no matter how your company is structured.
If you haven't founded your company yet, visit the Small Business Administration's guide to choosing your business structure for more information.
Where Can I Find Free Business Insurance Quotes for My Company?
Submit an online insurance application at insureon, and our agents will send you free quotes on company liability insurance. If you need coverage in order to sign a contract or meet state requirements, our agents can get your company covered ASAP.