Why do LLCs need insurance?
Owning your own business is very rewarding. You can set your own hours, build your brand and run your organization the way you've always dreamed. However, if you run your business as a sole proprietor, you're exposed to risks. If someone sues your business, they can sue you personally and target your personal assets, like your home. However, a Limited Liability Company (LLC) gives you insulation from any potential losses that your business might suffer. With an LLC, you can mitigate your risks. However, even if you structure your business as an LLC, your assets could still be exposed, particularly if you are accused of being negligent. And legal costs can quickly add up, even if a claim has no merit.
Insurance policies available for LLCs:
For most businesses, there are three standard types of insurance policies with their own unique protections. They help you confidently take the right risks.
Professional liability insurance for LLCs
Professional liability insurance is also called errors and omissions (E&O) insurance. This provides coverage for claims against businesses that provide professional and personal services. Having this type of liability insurance can protect you from lawsuits and other risks, including claims of negligence, which can put personal assets at risk. Here's an example.
A management consultant provides an analysis of a client’s business, along with recommendations that the client eliminate several staff positions. The client implements the recommendations, but the business’s revenues continue to decline. The client sues the consultant for negligence. E&O insurance can protect you form this type of claim.
In another example, an advertising agency is asked to produce new display ads for a client. The ads include libelous statements about the client’s main competitor. The competitor sues for libel. Professional liability would cover the advertising agency as the libelous act was in the course of the insured’s services to their client.
General liability insurance for LLCs
General Liability (GL) insurance is the basic insurance coverage every business needs. It protects you from claims by others for medical costs, bodily injury, property damage, and more. With this coverage, you can confidently take more risks. Here's an example.
A designer starts a home renovation business and forms an LLC. An affluent client has her renovate a section of their home but an employee accidentally drops a ladder on their prized baby grand piano. The client sues for damages to replace the piano which is worth $100,000. General liability insurance provides coverage for these types of lawsuits. And, because the designer has an LLC, she isn't sued personally which could have cost her all she had in savings.
Forming your LLC is a great first step. However, it's not sufficient protection. Your business needs liability insurance to lower your risks and cover the costs of claims, bodily injuries and medical expenses.
Learn about general liability insurance costs.
Business Owners Policy (BOP) for LLCs
A Business Owners Policy (BOP) combines business property insurance and general liability coverage. With a BOP in place, you have coverage for your business assets as well as for
Suppose an owner of an accounting firm uses an office in his home. The office is broken into and several computers are stolen. The accountant’s BOP could cover the cost to replace the computers.
Why do LLCs use Hiscox?
At Hiscox, we know business insurance is important. To safeguard your business and protect your family and assets, don’t wait to get coverage. Even if you’re a new business owner, with our fast application process you can receive your documents electronically and be covered the same day.
Reasons to choose Hiscox include:
- Claims responsiveness: When reporting covered claims, Hiscox immediately assigns agents to assist you.
- Commitment to service: Our knowledgeable agents offer the highest standard in customer service. Our customer rating is 4.8/5.
- Coverage for contracts: Our coverage satisfies the most standard contract insurance requirements.
- Custom insurance: We specialize in businesses like yours. We can customize policies specific to your risk factors.
- Flexible payment options: We offer monthly payment plans (with no fees).
- Worldwide coverage: Businesses that work globally can file claims through Hiscox. When filing claims, it should be in the U.S., a U.S. Territory or Canada.
With Hiscox backing you, you can focus on success. Get a free quote now and if you have any questions, call us at 1-866-283-7545. Our team of licensed agents is available Monday – Friday, 7am – 10pm ET.
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This information is provided to assist you in understanding the coverage we offer and does not modify the terms and conditions of any insurance policy, nor does it imply that any claim is covered. Coverages are subject to underwriting and may not be available in all states.