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Benefits of LLC Insurance

January 28, 2022 | Insurance 101

Many of the companies started every year take the form of a limited liability company or LLC. Registering as an LLC provides a certain amount of separation between your business assets and your personal assets.

However, a common misconception is that being an LLC protects you from business liability. It’s understandable that people think that, since “limited liability” is in the name. However, while being an LLC limits liability to the business and its assets, it doesn't limit the exposures that the business has to losses. If your company isn’t properly protected, it could be hit with a large financial burden—one that could even threaten the continuing viability of your business. 

Fortunately, there’s business insurance for LLCs that can protect the company. What some people refer to as LLC insurance is business insurance of various types that an LLC owner can purchase.

What do LLC Insurance Companies Offer?

When it comes to LLC business insurance, different types of business risk are covered by different small business insurance policies. The seven primary types of LLC insurance and benefits they provide are:

  1. Workers' compensation insurance for LLCs. Employee on-the-job injuries or illnesses can occur at any time. Workers’ comp helps protect your business by covering medical costs, legal fees, and lost wages due to an incident. 
  2. General liability insurance for LLCs. Also known as commercial liability insurance, a general liability policy covers damages and legal costs associated with a wide range of claims, including those associated with non-employee bodily injuries, customer property damage, and other incidents.
  3. Business owners policy or BOP for LLCs. Also called property & liability insurance, this combined liability/property coverage shields your business from the costs associated with lawsuits and also protects the space you work in, property needed to run your business, and more.
  4. Professional liability insurance for LLCs. Also referred to as errors and omissions or E&O insurance, this type of policy is essential if you make a living providing professional advice or services.
  5. Commercial auto insurance for LLCs. Companies that own or lease vehicles and use them for work purposes should have commercial auto insurance.
  6. Umbrella insurance for LLCs. Every insurance policy has a maximum amount of coverage it provides. An umbrella policy can cover costs that exceed the limit of another biBERK liability policy, subject to its own limit.
  7. Cyber insurance for LLCs. Purchased as an add-on to a BOP, general liability, or professional liability policy, this coverage helps pay costs related to data security breaches.

These coverages commonly offered by business insurance companies are a valuable asset to LLCs or any type of company.

LLC Business Insurance Exclusions

LLC insurance policies cover a wide range of risks businesses face. However, it’s important to be aware that every policy has exclusions or types of incidents it doesn’t cover. For example, it’s understandable that an insurance company won’t cover liability that results from things like illegal activity, intentional destruction of property, etc. 

Consequently, when purchasing business insurance for LLCs, it’s important to look both at a policy’s benefits and its exclusions. 

Learn More With Business Insurance Quotes

Whether you’re wondering, “What is LLC insurance?” or you’ve just formed your LLC and are realizing your lack of insurance is exposing you to the cost of lawsuits and other losses, you can get business insurance quotes online. The process is free and informative, and it can be completed in just minutes. 

You can go through it on your own or, if you have questions, our licensed insurance experts are always happy to provide assistance. Either way, you’ll have useful information on what types of business insurance are important for your company and how much you’ll pay for the coverage.

How to Save Money on LLC Insurance Costs

Like any business owner, you surely want adequate financial protection from your LLC insurance but as affordably as possible. How can you keep your LLC insurance costs down? There are a number of steps you can take. For one thing, you should buy only the coverage you need. Then, you should review your policy or policies regularly to determine if your requirements have changed and consequently your coverage should change. 

Your claims history also plays a role in what you pay for insurance. The more claims you have, the higher your rate is likely to be. Consequently, emphasizing the importance of safe business practices to your employees is very important. So is providing proper orientation training and refresher training as needed. 

You should also take advantage of helpful resources like those we provide at biBERK, including educational flyers, safety videos, storm safety tips, and more.