LLC business Insurance helps protect LLCs from liability claims such as property damage or bodily injuries caused by the business, products, or employees.
Do I Need Insurance For An LLC
LLC owners are generally protected from company liability to some degree. However, without a sound insurance plan, you will not have sufficient protection from sticky situations. With that said, it should be noted that LLCs tend to have a number of different policies.
Some of these policies include both professional or state requirements. Additionally, other policies come in handy and are thought of as a huge benefit to your business. When it comes to purchasing insurance policies, these can cost quite a bit. Having too many policies and having the right ones tend to make the difference for LLCs.
Read more on what is a limited liability company (LLC)?
What Insurance Plan Do States Generally Require?
Most if not all states require LLCs to have the following insurance coverage:
- Compensation insurance for workers – Even without employees this one might still be needed.
- Insurance tax for unemployment – If for some reason you’re forced to terminate employees, they’ll need to file for their unemployment benefit.
- Disability insurance – If for some reason employees become disabled on your compound or while performing company duties, your disability coverage will pay their salary.
So, before diving into insurance for your LLC, it’s a great idea to determine if all of the above are needed.
What Other Insurance Should Your LLC Have?
Besides those listed above, additional policies are a must-have. These are as follows:
- Professional liability insurance – This plan is necessary for companies where malpractice and errors occur; these include doctors, lawyers, and others where special licenses are needed for work. So, check with the state to see if your LLC may need this type.
- General liability insurance – When you conduct business without liability insurance, you’ll put your entire LLC at risk. If something should happen to anyone on your compound, you are likely to be sued, and you may go out of business. As such, having liability insurance will cover your company from liabilities and it can even cover you for legal, medical, slander, and libel expenses.
- Commercial property insurance – These policies should cover vandalism, theft, smoke, fire, and even flooding. Other natural disasters such as snowstorms, rain, and wind are also covered in this plan.
- Business interruption insurance – This is sometimes a separate policy that is added to your existing insurance plan. If your establishment is forced to close because of damages, you’ll be compensated for renovations, rentals, and lost earnings.
- Commercial vehicle insurance – If your company has a fleet and your employees use them, you’ll need coverage for your vehicles.
- Business owner’s policy – Unlike many others, this one is a state-of-the-art bundle that saves you on insurance coverage since it lumps many of those mentioned above in one plan.
What Extra Insurance Should The LLC Add?
In some instances, your LLC may not require any additional policies. However, before you make this decision on your own, it’s a great idea to consult with an attorney or a business adviser. The following are considered to be extras that you can get if necessary:
- Product liability insurance – If your company manufactures products, there’s a chance that somewhere along the line you may have a defective product. This protects your company from personal injury and property damages due to these products.
- Directors and officers liability – If someone decides to sue your officers or directors for negligence, this one covers you and all of the costs of the lawsuit as it applies to your policies.
- Life insurance for directors and officers – In the case where your LLC is small and you happen to lose a member, this will have several consequences on your company.
When you purchase the right insurance policies, you’ll be covered in more ways than just one. These policies are designed to ensure that you’ll have proper protection. However, it’s best to consider all of the options before making a decision about your insurance coverage.