How Much Is Business Insurance for an LLC? (2024 Guide)

Atty. Danya Shakfeh
Published by Atty. Danya Shakfeh | Author
Last updated: March 20, 2024
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Understanding business insurance for an LLC's finances can be hard, but it's really important. Every business, especially when it's growing, needs insurance.

We know this from our years of helping businesses start. If you don't get insurance, it can cause problems.

To help you learn how much business insurance costs, we're collecting what we've learned, practical insurance tips, and telling you exactly how much you should spend on insurance for your LLC.

Quick Summary

  • To cover an LLC adequately, business insurance costs vary, starting at about $400/year for home-based to higher for urban-based LLCs.
  • Factors like business type, size, location, and required coverage levels significantly impact insurance costs.
  • According to a study by The Hartford, 40% of small businesses will likely experience a claim within the next 10 years, highlighting the importance of insurance.
  • I always emphasize that choosing the right insurance coverage is crucial for LLCs to protect against unforeseen financial risks.


How Much Does Business Insurance Cost?

The cost of business insurance for an LLC will always depend on several factors such as:

  • The type of business
  • Business size
  • Industry
  • Location
  • Coverage needs
  • Level of risks

As a business attorney, I advise obtaining multiple insurance quotes to find the best rate.

Consider each provider's specific requirements and your business's risk profile to ensure you're adequately covered and getting a fair price.

Consulting with insurance professionals can also be beneficial.

How Much Does General Liability Insurance Cost?

A man counting money

General liability insurance safeguards LLCs and owners against claims from bodily injury, personal injury, and business property damage during business operations.

It also covers product and premises liability incidents.

It will also protect you and your LLC company from claims arising out of business advertising activities, such as libel or slander from false advertisements.

The cost of general liability coverage for LLCs will vary depending on various factors, such as the company's geographical location, type of business, and liability limits chosen for policy coverage.

To obtain an accurate price quote from different providers, it is advisable to compare their rates and coverage terms.

It is important to bear in mind that liability coverages are not a part of an LLC insurance policy.

These liability coverages have to be obtained separately from other companies offering this insurance or quality small business insurance for your LLC.

Professional Liability Insurance Coverage Cost

Professional liability insurance coverage costs depend on numerous factors. One of the most significant influencers is the business industry.

High-risk sectors, such as healthcare and finance, often incur higher premiums due to an elevated potential for claims.

Additionally, geographical location plays a substantial role, meaning that regions with higher litigation rates might experience increased LLC insurance expenses.

The most effective approach to securing the right price is by requesting quotes from various insurers.

How Can I Save On LLC Insurance During a Crisis?

To save on LLC insurance during a crisis, it is recommended that you choose liability limits from the minimum required amount as stated by law [1]. According to insurance industry analyses by the National Association of Insurance Commissioners, approximately 30% of small businesses adjust their coverage limits in response to economic downturns or crises, aiming to balance legal compliance with cost-saving measures.

In case of a crisis, either due to natural calamity or any other reason, consider raising liability limits gradually as your business recovers and returns to normalcy.

If you have been paying higher limits than your LLC insurance requires, you can start paying lower liability limits to obtain better savings.

Similar Article: How to Get Health Insurance for LLC Owners

What Does General Liability Insurance Not Cover?

A woman using a laptop

General liability insurance for LLC will not cover the following events:

  • Any type of intentional act committed by you or your employee.
  • Business-related auto accidents, including employee alcohol/drug injuries, war activity injuries by employees, claims from contractor service, advertising libel/slander claims, and employment practice disputes.

Does a Company Need General Liability Insurance?

Yes, companies ,including LLCs need the general liability insurance to protect against potential legal issues from unforeseen incidents.

This policy covers assets and employees.

Types of LLC insurance coverage you can choose for LLC insurance policy are:

  • Workers' Compensation Insurance
  • Commercial Auto insurance
  • Commercial property insurance, including insurance for buildings, insurance for equipment, insurance for loss of business income

To fully protect your company, understand the right LLC insurance. General insurance is available for LLCs, offering financial security against injuries, property damage, and more.

Do You Need Business Insurance for an LLC?

Two LLC owners deciding if they need a business insurance for an LLC

You need business insurance for an LLC; one important type is professional liability insurance.

The required liability insurance for an LLC depends on its business type and the products or services it offers.

If you are in a professional field such as lawyers or doctors, professional insurance coverage needs will be higher than those of an average LLC business.

Drawing from experience, I've seen that professional insurance is essential for all LLCs, particularly for those providing legal or medical services, to protect against legal claims.

Another type of LLC business insurance coverage is general liability. This policy will pay for injury or loss that may arise from general day-to-day business activities.

"LLC small business insurance is essential in high-risk sectors such as agriculture, construction, and manufacturing, while it's highly recommended even in low-risk industries like freelancing, bookkeeping, and home-based businesses."

- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions

Why Do LLCs Need Insurance?

A man thinking in office
  • LLCs need insurance to safeguard business assets and income, especially from unforeseen damages like fires [2].
  • Insurance is crucial for LLC owners to mitigate risks and protect personal and business interests.
  • Adequate coverage is necessary to shield against losses from accidents or unforeseen events.
  • Business insurance for LLCs also benefits employees and business partners by protecting them from potential losses.

This insurance coverage will also protect your company's employees against personal injury claims, such as accidents that may happen at work or outside of work premises.

FAQs

What Is Umbrella Liability Insurance?

Umbrella liability insurance is a type of LLC insurance that provides additional financial protection beyond the limits of your existing liability policies, such as auto insurance and small business insurance.

Is There Any Benefit to Getting Insurance Quotes Online?

There is a benefit to getting insurance quotes online. Online platforms offer the advantage of receiving multiple LLC liability insurance quotes through a single form. This allows easy rate comparison and policy selection.

References:

  1. https://www.investopedia.com/terms/b/business-liability-insurance.asp
  2. https://www.forbes.com/advisor/business-insurance/llc-need-small-business-insurance/

About The Author

Author
Atty. Danya Shakfeh, with over ten years of experience as a corporate attorney, leads Motiva Law, offering strategic legal advice to entrepreneurs. She is skilled at transforming complex legal concepts into clear strategies, allowing clients to pursue their goals. A "Rising Star" by Super Lawyers and an alumna of Northwestern University Pritzker School of Law, Danya is distinguished in business law.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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