General liability or business liability insurance provides essential protection from these costs and may even be required by contracts or commercial lease agreements.
Business owner’s policies (BOPs), which typically encompass commercial property insurance and business interruption coverage, tend to group together policies with similar risk characteristics into one policy bundle.
Cost
Cost of general liability policies depends on the size and risk profile of your business. For instance, financial and IT consulting firms with minimal risks such as office-based environments will typically incur lower general liability insurance premiums than landscaping and construction firms who may encounter more customers on site creating more chances for injuries to arise.
As well as general liability policies, your business may also require other forms of coverage such as commercial property insurance for its buildings and equipment, business interruption insurance for any losses sustained during repairs, commercial auto insurance policies on vehicles owned by the business and fidelity bonds to safeguard client funds against employees stealing them.
Some insurers provide bundle policies, like the business owner’s policy (BOP) or commercial package, to save both time and money when shopping for insurance coverage individually. A BOP covers business property, auto and general liability needs together for comprehensive protection; alternatively if purchasing separate policies it’s recommended selecting those rated highly by the National Association of Insurance Commissioners.
No matter which policy you purchase for your LLC’s insurance costs, liability coverage should always be the deciding factor. Many states mandate at least some level of insurance protection in order to operate legally and purchasing more than the minimum can protect against costly legal fees.
Liability issues usually involve bodily injury and property damage. If one of your customers slips and falls on an uneven sidewalk outside your store or an employee accidentally breaks one of your client’s windows during delivery, these incidents could potentially lead to lawsuits and costly legal fees.
Other types of liability claims could include copyright infringement, libel and slander, which don’t cause physical harm but nonetheless can damage a business’s reputation. If these allegations lead to you being sued, your general liability policy could cover legal expenses as well as settlement costs associated with any suits brought against your organization.
Coverage
If your company gets sued, the right business insurance policies can cover legal fees and settlements. Some policies cover damages caused by specific incidents while others have per-occurrence limits to cover multiple incidents. It’s essential to read your policy closely in order to understand exactly what it covers.
Liability coverage is an integral component of small business insurance and may be purchased as a standalone policy. But most businesses require multiple forms of protection against financial loss – including workers’ comp, commercial auto coverage, property loss coverage and business interruption protection – in addition to liability. Some contractors and landlords require proof of coverage before providing services or renting space to your business.
Your business’s insurance requirements depend on its services offered and associated risks. For example, if your employees use personal vehicles for business-related use then commercial auto coverage would be appropriate. Most states mandate employers maintain workers’ compensation insurance to cover medical costs or lost wages caused by workplace injuries or illnesses that arise in the course of employment.
In addition, if you provide professional services such as accounting or legal advice, errors and omissions insurance should also be part of your coverage. This policy protects against claims related to negligent acts that cause damages for clients.
Finding the appropriate LLC insurance depends on both your risk profile and budget. Some business owners opt for package policies that combine commercial property, commercial auto and general liability. NerdWallet has conducted research to identify top large business insurers for general liability and commercial auto policies as well as BOPs (Business Owner Policies).
As most business owners don’t face lawsuits regularly, having adequate business insurance in place remains important. A lawsuit could cost your business thousands in legal fees, administrative costs and settlement payments; without enough funds to cover such expenses it could put its existence at risk and even result in bankruptcy proceedings being filed against it.
Limits
General liability insurance provides your business with protection from third-party claims of property damage or bodily injury that arise from the work you perform for third parties. Without coverage, lawsuits and judgments could put your company’s finances at risk, even if their claims prove groundless; that is why having liability coverage is vitally important to its continued operation.
Your policy’s limits determine how much an insurance company will pay per incident and in total for all claims during its term; typically, higher limits mean higher premiums.
If your business is sued for damages that exceed its policy limits, you could be held personally liable. To safeguard against this scenario, excess liability insurance could provide cover after your general policy reaches its limit.
Liability insurance for LLCs is an essential form of business protection and may even be mandated in some contract or lease agreements. Professional organizations and other industry leaders often recommend it, too, so having a solid plan in place can help gain clients’ trust while competing against other firms without adequate coverage.
There are various forms of LLC insurance to keep in mind, such as workers’ compensation insurance, commercial auto coverage and business interruption coverage as well as fidelity bonds. Some providers offer all these policies together in one package known as a Business Owner’s Policy (BOP) which could prove more cost effective.
Your LLC needs liability coverage depending on its field of activity. For instance, if your work involves working on people’s homes or businesses, clients will likely require you to produce proof of your liability coverage before engaging you as their contractor or landlord. Contractors or landlords often insist that tenants provide this proof before renting space out to them.
General Liability Insurance may not be legally mandatory, but it can be an excellent asset to most businesses and even required in some contracts or leases. A high-limit general liability policy can give your business peace of mind in case it faces being sued and could make all the difference in keeping its doors open or closing its doors forever.
Deductibles
General liability deductibles may seem expensive, but they’re an integral component of an effective insurance strategy. Without them, your business could face catastrophic financial loss if sued for unfounded allegations or an accident leads to extensive property damage elsewhere. A reliable insurer can assist in selecting appropriate deductibles and limits tailored to its risks.
Your requirements depend on the nature and activities of your LLC business. For instance, if you work at clients’ homes and accidentally break their windows while performing services for them, general liability policy can cover repair or replacement costs as well as legal expenses should someone sue your business for reputational or advertising-related injuries (like slander or libel).
Some contractors, landlords and clients require you to have general liability insurance before they’ll work with or lease to you. Even if it’s not required by law, however, small business should still consider investing in it since lawsuits against small businesses often cost thousands in attorneys fees and settlement costs; having adequate protection can protect both assets as well as free up time to focus on running the company more efficiently.
Alongside general liability policies, businesses should also consider workers’ compensation insurance to protect employees injured or sickened while on the job. Directors and officers’ (D&O) coverage protects directors and senior management of an LLC from lawsuits unrelated to their day-to-day job responsibilities.
One such policy is the Business Owners Policy (BOP), which bundles general liability, commercial property insurance and business interruption coverage into one comprehensive policy. You can purchase them online from companies like Next which specialize in LLC insurance policies starting from $11 a month that can be managed online as well. NerdWallet also offers an extensive guide to business insurance to help you select which types are relevant for your LLC.