Do I need business insurance if I have an LLC?
Asked by: Serena Weissnat | Last update: July 19, 2025Score: 4.1/5 (25 votes)
Should I insure myself or my LLC?
If you have established an LLC, you have created a separate legal entity from yourself as a practitioner that can be sued, and business entity coverage is the only way to insure this. So, even if you are the only person there, business entity coverage is appropriate in protecting your career and assets.
At what point do you need business insurance?
It's a good idea to get business insurance when you're starting your small business. With business insurance, you can help protect your business from different risks as soon as you open your doors.
Can you operate a business without business insurance?
If you've asked yourself, “Do I need insurance for my small business?” The answer is yes. A small business insurance policy can help with protecting your assets and company. Without this coverage, small businesses may have to pay to repair or replace damaged or destroyed property on their own.
How much liability insurance should an LLC have?
Client contracts most often require a minimum coverage limit of $1 million. If you rent your office space or storefront, your landlord may require you to carry general liability insurance. This policy covers legal costs related to clients and other third parties injured at your office, or third-party property damage.
Business insurance for LLC
Can you have an LLC without insurance?
General Liability Insurance for LLCs
Without it, you or your business would have to pay out of pocket for their medical bills. This insurance can also help cover claims of personal injury. So, if you say something that can damage another person's reputation, they can sue your business for libel or slander.
Does a single member LLC need business insurance?
Here are key reasons why insurance is important for a single member LLC: Professional Liability: If your business involves providing services, professional liability insurance (also known as errors and omissions insurance) can protect against claims of negligence or harm caused by mistakes or failure to perform.
Can I self insure my business?
Some large businesses may choose to self-insure to save money and control costs for their commercial property, auto and general liability coverages. When a business chooses this route, they don't buy a plan from an insurance company.
What happens if you don't have professional liability insurance?
If you don't have coverage when it's required, you may have to pay a fine or penalty. You'll also want to check and see if your business needs other coverages like workers' compensation insurance or general liability insurance.
What is the best small business insurance?
- Best for variety of plans: Nationwide.
- Best for online experience: Next Insurance.
- Best for home-based businesses: The Hartford.
- Best for independent contractors: Hiscox.
- Best for medium-sized businesses: Chubb.
- Best for customer satisfaction: State Farm.
- Best for worker's compensation: Travelers.
Why would you be denied business insurance?
Insufficient documentation of the damage to the property or a lack of inventory of the valuable items on or in the property before the loss can quickly lead to an insurance claim being denied.
What is the most basic form of business insurance?
Most businesses need general liability insurance, and your state's laws may require workers' compensation insurance and commercial auto insurance. But you may need other types of coverage depending on what your business does, where it operates, what kinds of assets you have and other factors.
Is there a downside to an LLC?
(But in many cases, the advantages outweigh the drawbacks.) Cost: An LLC usually costs more to form and maintain than a sole proprietorship or general partnership. States charge an initial formation fee. Many states also impose ongoing fees, such as annual report and/or franchise tax fees.
Should I put everything I own in an LLC?
Keep 'just enough' money in the company
If your LLC is sued, the money that is in the LLC can be used to satisfy a creditor, but your personal assets usually cannot. To limit your vulnerability, it makes sense to keep as little money as possible in the company and pay the rest to the owners.
Do I need business insurance if I'm the only employee?
It can be empowering to be your own boss and adhere to your own schedule, but it can also bring a lot of risk—especially if your business deals with clients. Whether you have a physical location or work from home, you will need some form of insurance to protect you and your work materials.
Do you need insurance to start a small business?
As a general rule, you should insure against things you wouldn't be able to pay for on your own. This coverage protects against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.
How many employees do you need to be self-insured?
If you plan to implement a self-funded insurance plan, a typical rule of thumb requires an employer to have at least 100 employees covered. However, many organizations with over 30 employees opt for self-funding insurance plans.
Can you use personal insurance for business?
Though personal auto insurance typically doesn't cover business vehicles, commercial auto insurance can cover you for both commercial and personal use.
How much is a $1 million dollar insurance policy for a business?
On average, a $1 million liability insurance policy costs $69 a month, or $824 a year, for our small business owners. Keep in mind that every business is different, so the $1 million liability insurance cost will vary.
Is business insurance a startup cost?
For most businesses, insurance is considered a startup cost. However, the amount you pay will vary depending on your industry, number of employees and the risks faced on the job.
Can business insurance be paid monthly?
Paying Your Insurance Premium Monthly
It's not uncommon for a broker or insurance company to offer monthly or annual payment options. For an existing business, you will be asked to pay the first month of your premium, followed by 11 monthly payments.
How much does LLC insurance cost?
Finding out how much LLC insurance costs at the professional level will vary depending on your location, the number of employees you have, and more. On average, though, an LLC owner might be looking at a price tag of anywhere between $500 to $1,000 on professional liability insurance.
Does an LLC automatically have insurance?
LLCs need insurance policies that match their state requirements and type of business. These property and liability coverages protect against common risks.
What happens if there is no business insurance?
The median cost for a liability lawsuit starts at $54,000! Even a relatively mild injury, like a bumped head, could cost thousands of dollars in medical bills. If you don't have business insurance and you end up having to pay for these damages out-of-pocket, your business may not be able to recover financially.