Best Business Insurance for an LLC

Read our Advertiser Disclosure.
Contributor, Benzinga
February 10, 2022

Save big with Next business insurance + download their guide for FREE.

Having insurance for your limited liability company  (LLC) is essential to run a successful business. In general, business insurance for LLCs helps protect your company from claims that can arise during normal business operations. Without business insurance for your LLC, you'd have to pay for these claims out of your own pocket.

The type of insurance your LLC needs varies based on the type of business you own, but there are certain types of insurance every company needs.

Keep reading to learn more about the best types of insurance for an LLC.

Compare Business Insurance for an LLC

The Insurance Information Institute (III) recommends checking the financial health of any company you are considering as your business insurance provider. You can do this through insurance rating organizations such as A.M. Best. To make your search for LLC insurance more manageable, Benzinga has compiled a list of some of the top business insurance companies.

1. The Hartford

The Hartford is committed to customized coverage for its small business customers all across Texas. As your business grows, you can stay in contact with The Hartford to add on additional coverage as needed. No matter what types of risks your business faces, The Hartford’s insurance specialists will work with you to find solutions that fit your budget.

The Hartford offers industry-specific small business insurance, including:

2. Simply Business

Simply Business offers a comprehensive suite of business insurance that specializes in making it easy to insure your business. Whether you’re looking for construction workers' insurance or liability insurance for your startup, Simply Business even helps you find the right insurance for an LLC at the right price. Don’t turn to a thousand different carriers when you can get help from Simply Business.

Tell Simply Business a little bit about your business and you'll get almost-instantaneous affordable quotes from top insurance providers to protect your business and safeguard yourself. You can also look into workers’ comp, business owner’s plans, additional liability insurance, commercial auto and more that will cover everyone on your team, and you can get covered in accordance with state law without overspending. 

Building your business is hard enough. Let Simply Business make it easier. Get a quote from Simply Business today.

3. Hiscox

Hiscox is an insurance company that specializes in offering completely customized insurance solutions to its small business customers. It focuses on the risk your business specifically faces to put together the right coverage options to meet your needs. This insurance company provides coverage for several professions, including IT professionals, contractors, architects, engineers and more. For this reason, Hiscox is dedicated to helping its customers ensure that they have coverage that will satisfy most contract insurance requirements. It also offers coverage for work done anywhere in the world as long as the claim is filed in the United States, a U.S. Territory or Canada. You can count on Hiscox to partner with your business to make sure you have all of the coverage your business needs, no matter what challenges it faces.

4. B2Z

  • B2Z Insurance
    Best For:
    One-Stop-Shop Coverage
    securely through B2Z Insurance's website

    B2Z is available in the following states: Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, lowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin.

B2Z is at the top of the class when it comes to digital small business insurance coverage. Using insurtech powered by AI and data intelligence, they are able to provide a seamless journey from quote to coverage. B2Z demystifies getting comprehensive coverage for small business owners and entrepreneurs, providing products backed by the knowledge of expert insurance agents.

You can get coverage from your mobile phone -- without ever speaking to an agent. Need some help? Meet Diya, your digital (and personal) assistant for all things business insurance. Diya provides a customized and optimized customer experience.

Note: B2Z isn't available everywhere. You can get B2Z coverage in the following US states: Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, lowa, Kentucky, Michigan, Minnesota, Missouri, Nebraska, Nevada, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Wisconsin.

What is an LLC?

One of the most recent business entity types is a limited liability company (LLC). Limited liability companies can be formed as corporations or partnerships. LLCs can give owners, who are called members under this structure, the same protection from liability lawsuits as a corporation. Limited liability companies can also be set up and run like partnerships. The way an LLC is set up also affects how it is taxed. 

Here are a few things an LLC does for your business.

Separates your assets from the business: When you form an LLC, your assets are separate from the business's assets, including homes, automobiles, bank accounts and investment funds — in other words, creditors can't touch your personal assets when filing a lawsuit against your company. 

Creates a structure for the business: Because of how an LLC is set up, all of the business's owners get to make decisions about how the business runs on a day-to-day level. Professional managers, who can be members or not, can also run the business. If members want to hire people who have more experience running a business, this is a good way to do it. In many states, an LLC is run by its members by default unless it says otherwise in filings with the secretary of state or another government agency.

Allows you to save money on startup and maintenance fees: Some of the paperwork and fees for setting up an LLC aren't very expensive at first, but there are differences between how much each state charges for fees and taxes. The process is easy enough for owners to handle independently, but it's a good idea to get help from a lawyer or an accountant. Every year, there are usually new things that need to be done.

Types of Insurance Necessary for LLCs

LLC insurance provides essential protection for your business, your employees and the products or services you offer. Here are some important types of business insurance coverage you may need for your LLC. 

Professional liability: Professional liability insurance, often known as errors and omissions insurance, protects you when you don't deliver on your promises — even if you don't make a mistake — and includes things like negligence, bad professional advice, paperwork errors and harmful recommendations. Of course, every profession has its own set of legal concerns that a professional liability policy should be tailored to address.

General liability: General liability insurance (GL) protects third parties against bodily injury or property damage caused by you or your employees. For example, it can help pay medical bills for a customer who trips over a loose wire at your business and breaks a wrist. Without it, you or your company would have to pay the medical bills on your own. GL coverage also protects against personal injury claims such as libel or slander.

Workers’ compensation: Workers' compensation insurance protects employees against work-related accidents and injuries. Workers' compensation insurance covers medical expenses and lost wages, regardless of who is at fault. Your employees give up their right to sue you for the accident in exchange. Workers' compensation is required in most states for companies with at least three to five employees. Noncompliance can result in severe penalties.

Business income: Business income insurance pays you for any lost revenue resulting from a calamity. In most disasters, operations are disrupted, and you may be forced to abandon your premises. The policy also covers any additional costs you might have if you work from a temporary location.

Employment practices (EPL): EPL coverage pays damages for an employer's violation of an employee's civil or other legal rights up to the policy limits. In addition to paying a judgment, it covers legal defense costs, which can be high even when no crime has occurred.

Directors and officers (D&O): A directors and officers insurance policy protects directors and officers of organizations and nonprofit groups from lawsuits alleging they mismanaged the firm or organization with no consideration for others' rights. The policy will pay any judgments up to the policy's maximum limits. However, legal expenses can be costly even if no wrongdoing has occurred.

Commercial auto: Any car you use in your business operations is covered by commercial auto coverage. It covers any bodily harm or property damage caused by your company's cars. For example, suppose you don't have corporate vehicles, but your workers use their cars for work. In that case, you should purchase nonowned auto liability insurance if they don't have insurance or are under-insured.

Commercial property: Property insurance reimburses you if your business property is lost or damaged as a result of typical perils like fire or theft. Property insurance includes a building or structure and personal property such as office furniture, inventory, raw materials, machinery, computers and other business-critical goods. Property insurance may safeguard more than just your stuff. It can also help you get your firm back on track after a major loss. Some property insurance policies cover damage from water and other sources.

Umbrella coverage: As the name implies, an umbrella liability policy provides additional liability coverage. It protects against abnormally high losses when one of the underlying policies' limits has been exhausted. Umbrella coverage protects a firm over and above general liability and car liability. If you have EPL or D&O insurance, or any other type of liability insurance, the umbrella may give additional coverage.

Employer-provided health insurance: Company-sponsored health insurance is a type of insurance you purchase for your employees. The policy covers health insurance for the employee and any dependents. 

Commercial package policy (CPP): You can work with an agent to create a commercial package policy that covers several items under one policy to save money. Also ask your agent to customize policies for your business. For example, you likely don’t need D&O insurance for an auto shop you run by yourself with one other employee, or you don’t need workers’ comp if you’re a sole proprietor.

When to Update Your LLC Business Coverage

It is a good idea to review your business insurance coverage at least once a year — especially if you’ve had any major changes in your business operations. You may need to change your policy limits, add coverage or change your business policies in some other way.

Key events that may mean you need to update your insurance include:

Employee changes: Have you expanded your workforce or perhaps laid off employees during the year? Your workers’ compensation policy may need updating. Maybe you will need more than the minimum coverage if you now have more employees.

Have you expanded your operations or added new products and services to your LLC business? This could affect the amount of professional liability coverage you need as well as property coverage if you’ve added on to your building. If you have made a very large expansion, you could even need umbrella coverage to add protection above your policy limits.

Ownership changes: Did you have a partner who left your company or died? The named insureds may need to change on your business policies. Likewise, if new partners have come on board, they will need to be added to your policies.

You’ve downsized: Downsizing your business means you may be able to reduce your policy limits for property coverage or liability coverage.

New equipment or commercial vehicles: If you’ve added any equipment used for manufacturing goods or providing services, it should be listed on your commercial property policy. Likewise, vehicles you’ve purchased for business use must be added to your commercial auto policy.

Even if you haven’t made any significant changes to your LLC, it is a good idea to review your business coverage once a year with an insurance professional. A pro may even be able to find ways to save you money or better protect your business.

Finding the Right Insurance Coverage for Your LLC

Finding the right type of insurance for your LLC is essential for your business to succeed. The specific types of coverage you need will vary based on the type of business you own and the unique risks associated with your industry. 

Frequently Asked Questions

Q

Does an LLC include insurance?

A

Unfortunately, the LLC entity type only protects your personal property against lawsuits, and even then, it is restricted. While an LLC will protect your personal assets by separating them from your business, your company may still require its own insurance policy.

Q

How does insurance work for an LLC?

A

You may face a liability claim if your small LLC business delivers professional services to consumers or clients. Professional liability insurance, for example, can protect your business property and assets. These types of claims are covered by LLC insurance, which pays for these loss claims.

About Janet Hunt, Insurance Agent

Janet has been working in, and writing about, the insurance industry for over 20 years.