A limited liability company offers many benefits to entrepreneurs. It protects your personal assets in the event your company is sued and offers a few tax advantages. Despite these financial perks, an LLC doesn’t provide 100% protection against risks to your business or livelihood. However, LLC insurance can safeguard your assets. There are many coverage plans available. The type of policy you obtain depends on your needs, risks and budget.
A general liability policy is one of the most common business insurance coverages. It covers the cost of claims made against your business. For instance, if someone slips, falls and incurs bodily injury at your establishment, he or she can file a claim against your firm. Without this policy, you may end up paying thousands of dollars in medical expenses. If you have the right amount of general liability coverage in place, you and/or your LLC members can avoid those out-of-pocket expenses.
Any business is vulnerable to various types of property damage. This includes damages due to a burglary, flood, fire or another event. In these instances, a property policy is ideal when you need to either pay for or replace damaged items. Property types such as these can be covered under this policy:
- Building structure
It’s important that you have enough coverage to compensate you for your losses. In many cases, property insurance reimburses you for the actual value of your property at the time it was damaged and/or stolen.
Lost Income Policy
Business interruption can result in a loss of income. This can occur due to reasons ranging from undergoing remodeling to being shut down after a natural disaster. Even though your company may be closed temporarily, you still need to cover recurring personal and operational expenses. A lost income policy is beneficial because it helps you stay afloat financially when your company ceases operation for a period of time.
Do you hire employees? If so, state laws require that you have workers’ compensation insurance. This small business coverage provides financial benefits to employees who experience an on-the-job illness or injury. Certain states also require employers to have a disability insurance policy. With this coverage, the family of a deceased employee receives compensation if their loved one suffers a work-related death.
Professional liability insurance is essential if you provide services or sell products. Mistakes happen in the business world. A customer may be harmed by a faulty product. A client may suffer substantial financial loss because of the advice you gave. These are just a couple of scenarios that could result in a lawsuit against your LLC. A professional liability policy covers the cost to settle any claims arising from your company’s errors or omissions.
Protect Your LLC With the Right Insurance
The bottom line is an LLC, like any other business entity, needs insurance. There are many risks entrepreneurs face that can lead to major financial loss. It’s better to be prepared than to be caught off guard. When starting a business, it’s a good idea to discuss your insurance options with a trusted insurance agent who can customize a comprehensive policy that fits within your budget.