Can I Get Liability Insurance for an LLC?

Lucy Lazarony November 4, 2020

LLC is short for “limited liability company.” When you form an LLC, your business becomes its own legal entity that is separate from you personally. Your personal assets and your business assets are separate. With an LLC, if your business gets sued, your personal assets are off limits. But that doesn’t mean that you don’t need liability insurance for your business. In fact, general liability insurance and professional liability insurance are recommended, as is product liability insurance if you create a product with your LLC. Let’s take a look at the liability needs of an LLC.

General Liability Insurance

A general liability insurance policy, also known as business liability insurance, protects your LLC if you cause any damage whether it be bodily damage or damage to the client’s or another’s property. This insurance also can help cover claims of advertising injury or copyright infringement. Let’s say you use a photo in an ad campaign without getting the proper release. You could be sued for advertising injury and having general liability insurance would help to protect you. As the name suggests, general liability insurance is a good general policy to have.

Personal Liability Insurance

Personal liability insurance protects professionals such as lawyers, doctors, accountants and real estate professionals against negligence and other claims from clients. Any professional who has expertise in a specific area warrants this kind of insurance because general liability insurance doesn’t offer protection against claims of negligence, misrepresentation and malpractice brought forth by clients. So whatever the business of your LLC, if you have a distinct area of expertise, you will want this kind of personal liability insurance protection. Professional liability insurance is called medical malpractice in the medical field and errors and omissions for real estate professionals.

Product Liability Insurance

Product liability insurance protects your business against a lawsuit should a customer claim a product you sold, created or manufactured led to an injury or property damage. So if your LLC creates a product you will want to invest in this type of liability protection.

Additional Insurance Coverages for LLCs

An LLC needs more than liability insurance to protect its business. Here are some additional insurance coverages for safeguarding an LLC.

Workers’ Compensation

If your LLC has employees, workers’ compensation is a must and is required by law in most states. Workers’ compensation offers insurance coverage for when employees become ill or injured on the job. Workers’ compensation covers employees’ medical costs and a portion of their lost wages. So as soon as you hire your first employee, sign up for workers’ compensation insurance for your LLC.

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Commercial Auto

For an LLC that is a contracting business, a commercial auto policy is generally needed if you use your vehicle to transport work supplies such as parts, testing equipment and other tools. Cargo vans and pickup trucks all can be covered with a commercial auto policy. Commercial auto policies protect the business if one of your employees causes injury or damage to someone else while using the business vehicle. So if you have even one business vehicle it is worth protecting it with a commercial auto policy. Commercial auto policies also protect business vehicles from damage and theft.

Business Income Insurance

Also known as business interruption insurance, business income insurance covers the loss of business following a disaster. The disaster may cause the closing of the business and it may result in a rebuilding process. Business income insurance covers the profits that would have been earned if not for the disaster. Business income insurance fits well with all kinds of businesses since its aim is to put a business back in the same financial position as before a disaster strikes, The most common causes of business income insurance claims are fire and flood. If you live in parts of the country prone to fires or floods, you will want to add business income insurance to your list of insurance needs. And every LLC should consider it, since disasters may happen anywhere.

Business Property Insurance

A business property insurance policy protects your building and all its contents including exterior fixtures, outdoor signs and fences from fire, explosions, storms, theft, burst pipes and vandalism. So if your LLC owns property it is worth protecting it with a business property insurance.

Cyber Security Insurance

If your LLC has an online presence, you’ll want to invest in cyber security insurance. A cyber security insurance policy protects your business from computer-related crimes and losses, including data breaches, phishing schemes and ransomware attacks. A cyber security insurance policy covers both privacy and data exposures.

Home-Based Business Insurance

Home-based business insurance is business insurance for an LLC that is being run out of the business owner’s personal home. Home-based business insurance gets added to a homeowners insurance policy as a rider. It offers protection for a small amount of business equipment and liability coverage for injuries to third parties. If you are an LLC and you are working out of your home, consider protecting your business with home-based business insurance.

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