Forming a Limited Liability Company (LLC) has many advantages for business owners. While this business structure reduces financial risks, you will still need small business insurance to protect against high legal costs. Here's what you should know about getting suitable insurance for an LLC.
Several types of business insurance exist due to the vast number of industries and market niches. At the same time, there are many insurance similarities that all businesses share. It's typical for a company of any size to carry some form of general liability coverage that pays the costs of legal claims.
Employers are required by state law in all states to carry workers’ compensation insurance, which pays for accidents involving employees. The only leading business insurance required by law is auto insurance if the company owns vehicles. But you still may need different insurance forms to meet financial lenders' requirements.
Certain businesses, such as financial institutions and hospitals, must comply with laws protecting private data. It's wise for any business that transmits confidential information in digital form to purchase cyber liability insurance. Adding Errors & Omissions (E&O) coverage to your policy protects your firm against mistakes made by pros on your team.
As a business owner, you'll need commercial property insurance to protect your real estate investment if you also own commercial property. Many small business owners choose a Business Owners Policy (BOP) because it combines general liability and commercial property insurance for a lower cost than buying the two policies separately. Another form of coverage to consider is umbrella insurance, which extends the coverage limits of your existing policy.
While several forms of small business insurance exist, many coverage plans are affordable. It's helpful to customize your business insurance plan so that you're only paying for the coverage you need. It's possible to cut insurance costs if you show your provider that you have reduced business risks. Some of the numerous factors that affect business insurance costs include location, business size, and the type of equipment used for production.
It's advantageous to request a Certificate of Insurance (COI) from your insurer, which you can present to business partners and others. The certificate serves as proof of insurance, which is often required of contractors subcontracting with other vendors. A COI allows you to list "Additional Insured" parties as well.
Getting back to what type of business insurance you should get for your LLC depends on the types of risks the operation poses. There are both financial and personal safety issues to assess before signing up for a business insurance policy.
Regardless of your business structure, the real key to determining the right small business insurance policy is risk management. Does the liability part of the policy pay for specific legal issues your company will likely face someday?
Your LLC needs the right financial protection in the form of insurance so that complainers don't come after your assets. Contact us today to discuss your business insurance policy. Our experts at Riverbend Insurance can give you further information on your small business insurance options.