The answer to the question of whether or not your LLC needs insurance is a resounding yes, and for many reasons that we will explain here.
When you create a business, you need to look at the exposures that you are creating and answer some questions. Are you going to be contracting your business out to work for others? Are you going to be hiring employees? What about having the property of others in your LLC’s care, custody or control? All of these exposures opens you to being sued due to an injury or damaging someone’s property.
All business owners, regardless of the legal entity they are doing business under, should consider purchasing, at a minimum, a general liability insurance policy to protect them from lawsuits resulting from property damage or injury to others. The standard general liability policy is written with a $1,000,000 limit of liability. You can purchase lower limits, but many times the savings is extremely small to do so, and most businesses, landlords, and vendors you may work with, usually have a requirement of at least $1,000,000 in liability protection before they will hire your LLC business to do work for them or on their premises.
So what does the insurance provide for you? General liability insurance protects business owners from any legal damages that their company might cause to a third party as a result of their business operations. This includes any lawsuits or settlements from injuries sustained by employees or customers, or damage caused by defective products that you may be designing, altering, or building.
General liability insurance isn’t just for businesses with employees, but is also necessary for those who are self-employed or work as an independent contractor offering their services to individuals or other businesses.
As the owner of a Limited Liability Company (LLC), it is important to also insure any assets of your LLC if you want to be financially reimbursed for their destruction, damage, or theft. This can include everything from your office computer and furniture to inventory or tools and equipment.
To make the purchase of an LLC’s insurance less expensive, most companies offer packaged policies that include both general liability and property; referred to as a commercial package policy. In fact many times the liability premium is quite small through most companies, but again is based on the exposure or what it is that you are doing.