Small Business Insurance for LLC
Getting business insurance should be one of the first things you do for your new business. If you don’t have insurance, you’ll have to pay for any claims against your business out of your own pocket.
So, even if you have a limited liability company (LLC), the right coverage can save both your personal assets and your business assets. This article is meant to give small business owners all the information they need to choose the right business insurance policy for their LLC.
The Basics of Small Business Insurance
When it comes to insurance, there are three people you need to know about: the insurer, the person who is insured, and the person who owns the policy. Most of the time, the insurer is a big business that sells insurance and pays out claims (e.g., Geico or State Farm).
The person or thing that is covered by an insurance policy is called the insured. This can be your house, your car, or your business in this case. The person who buys and owns the policy is called the policyholder. In this situation, it’s you, the owner of a small business.
If you’re looking for any kind of insurance, the word “indemnity” will probably come up a lot. This just means to make up for a loss or protect someone from legal responsibility. Say, for example, that you have Geico car insurance. Geico will “hold you harmless” if your car gets into an accident. In other words, Geico will pay you back for the money you had to spend on fixing your car.
Liability insurance for everything
Business liability insurance is another name for general liability insurance. This is the only protection you’ll need for many small businesses. General liability insurance protects your LLC against claims that it hurt someone or damaged their property.
This includes any injury to a person caused by your business (e.g., a customer slip-and-fall). Additionally, general liability insurance covers any damage you may cause to your LLCs rental property. So if your LLC is leasing a space to run its business, general liability insurance is highly recommended.
Income insurance for a business
This type of insurance may also be called “business interruption insurance.” That’s because it pays for a business’s lost income if it can’t do its usual business because of damage to its property. In other words, the insured business can get money to make up for the money it lost because it couldn’t open.
For instance, let’s say there’s a fire in your building and you can’t open your business until it’s fixed. If you have business income insurance, you can get paid for the money you would have made while your business was closed for repairs.
Property insurance for businesses
This insurance takes care of the business property your LLC needs to run its business. This can include any real estate that your LLC owns or rents out, as well as the inventory and tools that your business needs to run.
For example, a factory might want this insurance in case a costly machine breaks and the owners have to buy a new one.
The policy for business owners (BOP)
One of the easiest ways to protect your small business is with a business owner’s policy. It combines the most important types of coverage that any small business needs. So, you can concentrate on getting your business going instead of dealing with insurance agents.
A typical policy for a business owner will cover general liability, commercial property, and business interruption. This is a good place to start, but depending on the type of business you run, you may need more coverage.
Liability insurance for professionals
General liability insurance won’t protect you from claims of negligence, malpractice, making a mistake, or giving false information. So, some business owners should get extra insurance to protect themselves and their businesses from claims that could come up because of the service they provide. Most professional liability insurance will cover claims of negligence or malpractice on the part of the professional.
This liability policy is important for professionals who provide licensed or specialized services, like accountants, lawyers, architects, doctors, and anyone else who works in a licensed or specialized field.
Professional liability insurance may be called different things depending on the type of professional service your small business offers. For instance, doctors will get insurance against medical malpractice, and real estate agents will get insurance against mistakes they make.
Insurance for workers’ compensation
This insurance pays for employees to get better after getting sick or hurt at work. This can include things like medical bills, lost wages, costs of rehabilitation, and even death benefits for the families of workers who die on the job. In most states, this type of insurance is required for businesses with employees.
For example, a construction company might have this coverage in case one of their workers falls off a ladder at work, breaks his arm, and can’t work for a few months.
Commercial Auto Insurance
This insurance pays for damage to property and medical bills if an accident happens with a company vehicle. If your business depends on vehicles, like if you own a trucking company, a transportation service, or a delivery service, you will need this coverage.