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Limited Liability Company (LLC) Business Insurance
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Why do LLCs need business insurance?
As an LLC, you've taken a step toward reducing the risk to your personal assets, but you need to protect your business assets too. Commercial insurance covers costs if a client sues over a mistake in your work, or if someone suffers an injury at your office. You might need insurance to comply with state laws or the terms of a contract.
What types of insurance do LLCs need?
These insurance policies cover common risks faced by LLCs.
General liability insurance
General liability insurance covers the cost of third-party accidents, such as a client who trips and suffers a bodily injury at your LLC's office. It may be required for a commercial lease.
BEST FOR
- Slip-and-fall accidents
- Accidents that damage client property
- Libel and other advertising injuries
Professional liability insurance
This policy covers legal costs when a company that offers professional services makes a mistake that harms a client. It's sometimes referred to as errors and omissions insurance (E&O).
BEST FOR
- Mistakes that cause a client to lose money
- Missed deadlines
- Accusations of negligence
Cyber liability insurance
Cyber insurance helps LLCs recover from data breaches and cyberattacks. It's strongly recommended for businesses that handle credit cards or other personal information.
BEST FOR
- Data breach notification costs
- Data breach investigations
- PR costs for reputational harm
Workers’ compensation insurance
Workers’ comp shields LLCs from work-related medical bills that health insurance might deny. Most states require this coverage as soon as a small business hires its first employee.
BEST FOR
- Work-related medical expenses
- Disability benefits
- Lawsuits from employee injuries
Business owner's policy
A BOP bundles general liability coverage and commercial property insurance at a discount. It protects LLCs against the most common lawsuits and business property damage.
BEST FOR
- Personal injury lawsuits
- Stolen or damaged business property
- Business interruption incidents
Errors and omissions insurance
E&O insurance protects LLCs from legal fees related to mistakes, oversights, and missed deadlines. It's sometimes referred to as professional liability insurance.
BEST FOR
- Errors that cause a client to lose money
- Accusations of negligence
- Missed deadlines
Commercial property insurance
This policy covers repair or replacement costs if property belonging to your LLC is stolen, lost, or damaged. Bundle it with general liability coverage in a BOP for a discount.
BEST FOR
- Fires
- Storm damage
- Theft
Commercial auto insurance
A commercial auto policy covers costs when an LLC's business vehicle is involved in an accident. Each state has its own requirements for auto liability insurance.
BEST FOR
- Auto accident injuries
- Property damage caused by your vehicle
- Vehicle theft and vandalism
Fidelity bonds
Fidelity bonds provide reimbursement for a client if one of your employees steals from them, including theft by electronic funds transfer. They're sometimes required by client contracts.
BEST FOR
- Employee theft or fraud
- Illegal funds transfer by an employee
- Client contract requirements
Looking for different coverage? See more policies.
How much does business insurance cost for LLCs?
LLCs and other small businesses often qualify for discounts on business insurance. Factors that affect your premium include your profession, number of employees, and the policy's limits and deductible.
Here are the average costs for top policies sold by Insureon:
General liability insurance: $42 per month
Professional liability: $61 per month
Workers' comp: $45 per month
Find business insurance requirements in your state
Select your state to learn about insurance requirements for your small business.
Common questions about LLC business insurance
Why is insurance important for single member LLCs?
Here are a few reasons why insurance is crucial for LLCs, sole proprietors, independent contractors, franchises, and other small business structures.
You may need insurance coverage to sign a contract or a lease. Clients and landlords may require you to carry insurance to protect themselves against potential losses. In some cases, they may ask you to list them as an additional insured on your policy.
You may need insurance to comply with the law. Depending on the laws in your state, you may need coverage for a business-owned vehicle, to obtain a license in your field, or to protect against work-related injuries.
You gain client trust by being insured. Even when it's not required, carrying insurance is a sign of professionalism and financial stability. It helps attract clients and can give small business owners an edge over their competitors.
Insurance protects your own business from catastrophic losses. 43% percent of small businesses have faced or been threatened with a lawsuit, but they often lack the resources that larger companies draw upon to survive a legal battle. Insurance helps your LLC withstand unexpected costs from customer injuries, fires, and other incidents that might otherwise prove devastating.
How do I get a certificate of insurance?
With Insureon, you can get usually get a certificate of insurance on the same day that you apply for quotes. It’s a simple three-step process:
- Fill out our easy online application.
- Compare free quotes from top-rated insurance providers.
- Buy a policy and download a certificate of insurance.
A certificate of insurance will outline the details of your business liability insurance, such as policy limits, deductibles, and any endorsements. It serves as proof of insurance for clients, landlords, lenders, and anyone else who asks whether your business is insured.
Does my profession affect what type of insurance I need?
Yes, the type of work you do can affect which business insurance policies you need.
For example, the law in several states requires workers' comp coverage for construction contractors, even if they work alone, due to the high risk of injury. In some states, real estate agents and brokers are required to carry errors and omissions insurance. Plumbers and landscapers may need a general liability policy to obtain a license.
Manufacturers, retailers, and others involved with products should consider carrying product liability insurance. Often included in general liability insurance, this policy covers liability claims related to harm caused by a product.
Cleaning businesses may need a janitorial bond before a client will allow cleaners onto their property.
It may take a little research to find out which type of business insurance coverage you need, or simply ask a licensed insurance agent.
How can I save money on business insurance for an LLC?
Insurance is usually affordable for small, low-risk LLCs. There are a few ways to find cheaper insurance:
Bundle policies. Many small business owners buy general liability coverage and commercial property insurance together in a business owner's policy, which costs less than purchasing each policy separately. It's sometimes possible to bundle additional coverages, depending on your profession.
Shop around. Compare insurance options from different providers to make sure you're not paying too much for insurance. With Insureon, you can get quotes today with our free online application.
Choose a high deductible. You can customize your insurance policy to save money, such as by choosing a higher deductible or lower policy limits.
Avoid claims. Finally, take steps to reduce your business's risks. Prompt cleanup of spills, the elimination of clutter, and bright lighting can help customers and employees avoid accidents, which helps keep your premiums low.
What other types of coverage do LLCs need?
The policies your business needs depend on your specific risks, such as whether you drive for work or have a client who requires a certain type of insurance.
Other coverage options to consider include:
Business interruption insurance: This policy covers financial losses if your business is forced to close temporarily due to a fire or extreme weather. It can often be added to a business owner's policy.
Hired and non-owned auto insurance: An HNOA policy provides liability protection for an LLC where employees drive their personal vehicles, leased vehicles, or rented vehicles.
Directors and officers insurance: This coverage protects an LLC's board members and officers from lawsuits claiming their decisions resulted in a financial loss.
Commercial umbrella insurance: Umbrella insurance covers legal expenses when the limit is reached on another liability policy, such as general liability or commercial auto insurance. LLCs may need this coverage to meet client requirements for higher liability limits.
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