Owning a business has perks, but there’s definitely a certain level of liability that comes with being your own boss. That’s why many entrepreneurs opt for an LLC structure instead of a sole proprietorship. Under LLCs, your personal assets are virtually untouchable. So, in the event of a liability lawsuit, you are only held accountable for the actions of the company itself.
While LLCs aren’t obligated to buy policies in many cases, having a fair amount of insurance coverage is still a wise way to protect the company. Here are a few reasons why an LLC needs business insurance coverage.
Reason #1: You Need Protection Against a Lawsuit
One key area why an LLC might need business insurance is for protection against lawsuits. Many LLCs form to help protect the owners of the company. However litigation against individual members due to actions of the business is still a possibility. This is where having general liability insurance becomes incredibly important. In some cases, coverage extends to both the LLC and the owners. It can protect both the business and owner assets.
Reason #2: Your Industry Requires Coverage
Another reason why an LLC would need business insurance is that it is a rule of operations. Of course, not all industries need liability insurance coverage, but there are a few that do.
For example, in some areas of the country, healthcare providers routinely need professional liability insurance. They have to do so in order to maintain state licensing. Also, most commercial landlords require proof of general liability insurance before signing a lease. Having this coverage before having to show proof is vital to ensure your business runs smoothly.
Reason #3: You Have Employees
LLCs with employees also need business insurance. Many small companies opt to hire staff within the first few years they are operating. In this case, state law usually requires you to carry worker’s compensation insurance. It will act as protection against any on the job injuries.
Having business insurance isn’t always mandatory. However, it is still a good idea for LLCs to purchase coverage in case of a serious accident or incident. Putting in the hard work to grow a company takes time. A costly lawsuit could ruin your efforts if you aren’t adequately prepared.
Are you ready to learn how business insurance can protect your LLC? Contact your local agent today to schedule a no-obligation policy review.