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What is LLC insurance? We've Got Your Answers Here

3-minute read

Mariah Bliss

Mariah Bliss

24 May 2022

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Limited. Liability. Company. An LLC. Put these three words after the name of your small business and it immediately has the ring of “Bond. James Bond.” Professional, sophisticated, and able to take on just about anything.

But just as a well-known secret agent doesn’t take on an assignment without some additional outfitting from his quartermaster, you also should consider some additional protection to go along with your LLC status: LLC insurance.

Let’s start with what is LLC insurance, and then get into why you might need it.

What is LLC Insurance?

Structuring your business as an LLC has already given you some protection by potentially shielding your home, vehicles, and other personal assets from any claims or debts from your business.

However, an LLC itself doesn’t offer protection against business obligations or lawsuits. That’s what LLC business insurance does.

Think of LLC insurance as an ejector seat that launches a secret agent to safety right before their cool sports car shoots off a cliff. You hope you never need to use it, but you’re extremely glad it’s there when you do.

Insurance for an LLC can often be a combination of different types of business insurance policies, including insurance for property owned by LLC. The ones that are right for your LLC will depend on the type of business you have.

Why Does an LLC Need Insurance?

Some businesses come with more risk than others (e.g., being a roofer versus a music teacher). Beyond the risk of doing what you do, there’s also the risk of losing everything you’ve built.

Plus, if you’re running your business as an LLC, you’ve already invested a good amount of time and money to do so.

So why does an LLC need insurance?

As your business grows, there’s a lot more on the line. Once you start picking up more customers and bigger contracts, you have a lot more to protect.

According to an industry study, four out of 10 small businesses will experience an event that triggers an insurance claim within any given 10-year period.

The same study also revealed that the average cost of a customer injury or damage claim for small businesses is $30,000.

Compare that with the cost of a general liability policy. In fact, with Simply Business, you can compare policy quotes from multiple insurance companies. With some as low as $19.58 * per month, LLC insurance can be a lot less expensive than paying a five-figure settlement.

How Does LLC Insurance Coverage Work?

LLC insurance coverage works by paying out claims that may have resulted from work you’ve done for a client.

For example, if a client sues you for giving negligent advice, your insurance policy (in this case, it’d be professional liability insurance) would pay for an attorney to defend you in this lawsuit. If the claim is successful against you, your policy would pay out the cost of the claim, up to your policy limit.

Bottom line: LLC insurance helps protect your business’s finances - as well as your personal finances - from being used to pay out any claims brought against you.

How Much Does LLC Insurance Cost?

Think your LLC insurance cost is going to break the bank?

Not if you get insured with Simply Business. Our general liability policies start at just $21.25/month*, and our other insurance policies are just as affordable.

Plus, we’re the only insurance platform that lets you compare LLC policies from the nation’s most trusted insurance providers, so you can pick the best option for your LLC.

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LLC vs. Liability Insurance: What is the Difference?

When it comes to LLC vs liability insurance, the difference boils down to your levels of coverage.

To put it simply (no pun intended!), LLC insurance is an umbrella term used to describe the different types of policies that may be bundled together to protect an LLC (like general liability, workers' compensation, professional liability, and other policies).

Liability insurance specifically refers to a type of insurance product that - you guessed it - helps you minimize your financial liability as a business. In this case, liability insurance can refer to general liability, professional liability, or both.

Get Insured and Get on With Business

An LLC not only comes with limited liability, it usually comes with limited time to get everything done as well.

We get it. That’s why we’ve stripped down our process to make it fast and easy to get LLC insurance. Whether you start online or speak with one of our small business insurance pros at 844-654-7272, we can usually get you insured and on your way in less than 10 minutes. We’re available Monday through Friday, 8 a.m. to 8 p.m. ET.

We cut through the jargon and complex terminology. We ask only a handful of questions. And we find quotes from the nation’s top insurers so you can choose the best coverage and the best price for you.

We just want to get the job done. Just like you.

*Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on July-September 2023 data of 10% of our total policies sold.

Mariah Bliss

Written by

Mariah Bliss

I love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!

Mariah writes on a number of topics such as small business planning, contractor insurance, and business licenses.

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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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.

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