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How to Find LLC Insurance for Your Business

7-minute read

A man and woman talk while he uses a laptop.
Allison Grinberg-Funes

Allison Grinberg-Funes

27 July 2021

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As business owners, every day presents us with new decisions. Whether it's which lease to sign, which tools to use, or how to advertise our services, each choice has an impact.

Choosing business insurance is one of the most impactful choices you can make for your company. But how do you find LLC insurance that fits your business’s specific needs?

We'll review the steps you can take to make sure you find coverage that helps protect against challenges your business may face and go deeper into why your LLC may need insurance.

6 Steps to Find LLC Insurance for Your Business

1. Understand your profession's risks.

Every business operates and serves its customers differently. That means your business will likely face risks that others don't.

Take the time to research and understand what risks you face as a business owner in your profession. Think you know all the potential risks you face on a daily basis?

Humor us! You never know — there might be something you haven't considered. Research what risks are common in your industry and make a list of them. This list will come in handy later in the process to help you find the right coverage.

2. Know what type of LLC insurance may be best for you.

Not all LLC insurance policies may cover the risks that your business faces. There are two types of liability insurance coverage you may want to consider for your LLC: general liability insurance and professional liability insurance.

General liability insurance, also known as commercial liability insurance typically protects you from:

  • Property damage
  • Third-party accidents
  • Bodily injury
  • And more

Say you're a general contractor working on the construction of a customer's backyard deck. The project will take a week, and one evening after you've wrapped up work, your customer calls you from the hospital emergency room.

Their child stepped on a nail and needs stitches; as a result, they're suing your business. Without a policy with general liability coverage, you may have to pay for the cost of your customer's child’s medical bills out-of-pocket.

Those bills could potentially put your business into unexpected debt.

With LLC insurance, though, you could be covered for the cost of the medical bills and legal fees, up to your policy’s limit.

Professional liability insurance is LLC coverage that typically protects you from:

  • Alleged stolen ideas
  • Negligence or alleged negligence
  • Copyright infringement
  • And more

Say you're an accounting consultant filing a client’s tax return. They seem satisfied with your work, but months later, they come back and sue you. The IRS audited the client’s return and is requesting they pay a large penalty and other fees. The client blames your negligence for the audit and wants you to pay the requested IRS fees.

Without professional liability coverage, you could face paying those fees out-of-pocket, as well as costs of hiring a lawyer to defend you in the lawsuit.

With professional LLC liability insurance, you could be covered for the IRS and legal fees, up to your policy limit.

Considering the risks that you learned about in Step 1, you may want to have an idea of what coverage your business could use.

3. Talk to other LLC business owners.

The research you do online can definitely be helpful, but there's something to be said for conversations with other business owners like you.

Since some insurance carriers base coverage rates on a business’s location and profession, it may be helpful to hear some first-hand knowledge. Make an effort to meet other business owners, either in your local community or who work in the same profession (or both!). Other business owners can share what they've learned through their insurance policy shopping experience.

Here are some examples of questions you may ask other business owners:

  • What type of insurance coverage do you have?
  • If you're comfortable talking about it, has your business ever been involved in a lawsuit? If so, how did your insurance help you in that situation?
  • How many policies did you compare before deciding which coverage was right for you?

You may be surprised at how many things you have in common with someone, based just on their also being a business owner! Hopefully, conversation flows easily, but using one of the above questions may help to get a discussion going.

4. Learn from trade and/or professional organizations.

Talking to business owners in your area may be as easy as walking through a business's door or making a phone call. But there are entire networks of business owners and other resources out there.

You can usually find local groups through organizations like the Small Business Administration (SBA). You also may consider checking with the organization that certified you in your specific business trade.

Organizations often offer memberships to certain trade and networking groups when you get your certification through them.

Reaching out to a wider variety of professionals who can relate to your challenges can be helpful when shopping for business insurance. You may get a better idea of what to expect down the road in your career.

5. Compare LLC insurance coverage options.

If you use a certain product or tool in your job, it's likely that you considered another type or brand before deciding which was to be your go-to. Try thinking about insurance for your business the same way.

You don't have to buy the first insurance policy you're quoted. Take some time to shop around. Remember, policies can change a lot, based on factors such as:

  • Your location
  • Your business
  • How long you've been in business
  • How many employees you have
  • And more

Because of all the factors that go into the cost of business insurance, consider comparing quotes to make sure you’re getting the right policy.

With Simply Business, we make that easy. In less than 10 minutes, you can compare quotes for free using our quote comparison tool.

Make sure you're not comparing only the cost of the policies, but also the amount of coverage. Many policies give business owners the option between different amounts of coverage per incident; for example — $1,000,000 coverage per incident.

In the event a claim or lawsuit costs more than your policy's limit, you may have to pay the difference out-of-pocket. So it's important to compare the amount of coverage, and make sure it aligns with the risks your business may face.

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6. Talk to a licensed insurance agent.

How do you make sure that all the risks you found in Step 1 are covered under a policy?

This is where speaking with a licensed insurance agent can be helpful. If you have questions about the amount of coverage a policy offers your business, you can rest easy knowing there's an expert to help answer your questions.

Call Simply Business to talk to a licensed insurance agent at 844-654-7272. An agent can help you understand which LLC insurance options are available for your business based on the questions you answer.

Why Your LLC May Need Business Insurance

Now that you know how having an insurance policy could protect you financially, let's review some other reasons why insurance could be a must-have for your business.

1. You have customers.

Our customers are what keep our businesses running. But did you know that having liability insurance could help to attract customers and keep them around?

Knowing that your business is protected against risk can help put customers at ease when making the decision to hire you. That's because they understand that if a mistake or accident happens, there's an insurance policy supporting your work.

Especially when it comes to standing up against your competitors, having insurance coverage can help to set you apart. If a customer is choosing between hiring a company with insurance coverage and a company without, they'll likely go with the protected business.

2. You work from home.

What's great about owning your own business is the flexibility it gives you to work from anywhere you want — including your home. But if you run your LLC from your home, it's likely that you'll need business insurance.

While many people have homeowners or renters insurance, not all those policies help to cover events that may impact your home business.

For example, if there was storm damage to your home office space, or if a thief stole expensive business equipment, your homeowners or renters policy may not cover the cost to replace those situations.

In this case, home-based business insurance is the coverage you may need to protect your LLC.

When you're reviewing the risks your business could face in Step 1 above, you also may want to consider risks that could happen if you have a home office.

3. You're ready to hire employees.

It's possible to run an LLC business on your own. But at some point, you may want to hire employees to help you run and manage your business.

If that's the case, employees won't be interested in just seeing what type of work you'll be offering them, but also how they'll be protected if something goes wrong. This is where having coverage can benefit you. Similar to how customers want to know work is protected, so do employees. After all — they're the ones doing the work!

Depending on your state, another type of insurance you may need is workers compensation insurance.

Workers compensation insurance helps protect your employees if they get sick or injured while working for you.

It can help to cover things such as:

  • Medical bills
  • Rehabilitation costs
  • Lost wages
  • And more

While there are many factors that play into why someone may accept a job at your company, knowing that they're likely protected from events like the ones above may help influence their decision.

4. You're applying for financial assistance.

As business owners, it's often a goal to be continually growing your business. In order to grow, you may need financial assistance. This may come in the form of a loan, grant, or another form of funding.

When applying for financial assistance, applications may ask if your business is insured.

This is because if an organization is going to lend you money for your business, it wants to make sure that the money will be properly used. If an accident happens, they'll likely want to know that the money lent will be going toward its intended purpose and not toward damages.

Applying for any type of assistance is stressful. There's often a clear goal for the money you're applying for, and you want to do all you can to get approved. Having proof of insurance is one way to show you're a trustworthy business owner.

5. Lawsuits are common.

Maybe you're just starting out as an LLC business owner, or maybe you've been in business for years. Either way, it's likely that you take steps to avoid accidents and mistakes.

Unfortunately, accidents and mistakes can still happen. After all, you're only human! But there's something else business owners may not consider, which is what their customers may do.

Even if you don't believe you're at fault, a customer may still sue you. And lawsuits can be more common than you may assume. According to a study from the SBA, 36%-53% of small businesses surveyed reported being involved in a lawsuit in a given year.

Sure, that percentage could be higher, but if you end up lumped in with that statistic, you'll be glad to have insurance coverage. So in the event you get sued, you'll have coverage to help pay for requested fees and a lawyer to help defend you, up to your policy's limit.

The LLC insurance search can be quite the journey, but now you know the steps you can take to find the right coverage and just how important it can be for your business's success. Once you're covered, you can move forward to running your business and doing what you love!

Allison Grinberg-Funes

Written by

Allison Grinberg-Funes

I’ve told stories since I learned to talk and written since I could hold a pen. As a small business owner myself - I'm a freelance writer and yoga teacher - I love contributing to the entrepreneurship community in different ways (including writing for Simply Business!). When I’m not drafting articles for SB, I can be found on my yoga mat, perusing an indie bookstore, and writing (with my cat nearby of course).

Allison writes on a number of topics such as small business leadership, business structures, and employee training.

This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer

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