Do I Need Business Insurance for My LLC?

It's a good idea to have business insurance for your LLC. Without insurance coverage, you'd have to pay out of pocket to cover claim costs, which may not be feasible for many small businesses. The insurance needed for small business depends on the type of small business you run and the risks it faces. Learn more about What Does What Does LLC Insurance Cover.

What Is LLC Insurance and Why Do You Need It?

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Key Takeaways

Insurance policies commonly purchased by LLCs can provide liability coverage to help protect your business from financial losses.
If your LLC provides professional services to customers or works with clients directly, you’ll likely need professional liability insurance and general liability insurance.
LLC insurance costs will vary because insurance providers typically consider many factors, such as your claims history, number of employees, revenue and location to determine your price.

Why Might LLCs Need Insurance?

Registering as an LLC separates your business assets from your personal belongings. However, it doesn’t protect your business from the various risks it may face. Depending on the industry your business is in, business insurance may be necessary for your LLC.

Without LLC insurance, you’d have to pay out of pocket for claims, which may not be feasible for many small businesses.

Does an LLC Protect You From Personal Liability?

An LLC offers personal liability protection by legally separating your personal assets from your business. However, this protection has limits. If your business harms a customer, faces a lawsuit or owes money it can’t repay, an LLC alone doesn’t cover those costs. That’s why LLC insurance is important. It helps provide a safety net for your business beyond what the LLC structure offers.

What LLC Insurance Might I Need?

As a small business owner, the type of insurance you might need depends on what kind of business you run and the risks you face. This short video explains the types of LLC insurance you may need.

For many LLCs, having the right insurance is an essential part of running a successful business. Small business insurance for LLCs helps protect your company from claims that can come up during normal operations.

If your small business provides professional services to customers or clients, you could be at risk of a liability claim. Certain types of business insurance for LLCs, like professional liability insurance, can help cover legal defense costs for certain covered lawsuits.

What Does LLC Business Insurance Cover?

LLC insurance from The Hartford provides liability coverage to help protect your business from covered damages. You may want to consider two important types of coverage: professional liability and general liability insurance.

Important:

While an LLC separates your personal belongings and business assets, it doesn’t protect your business from everyday risks.

The Hartford’s LLC Insurance Coverage Options

The Hartford offers these types of business insurance for LLCs:

Coverage Type	What It Covers
General Liability Insurance	Bodily Injury, property damage, personal injury (libel/slander)
Professional Liability Insurance	Mistakes of negligence in the professional services given to a client
Workers’ Compensation Insurance	Work-related employee injuries or illnesses
Commercial Auto Insurance	Bodily injury or property damage claims from an auto accident caused by your business
Commercial Property Insurance	The owned or rented building you operate your LLC from, as well as the tools and inventory you rely on
Business Income Insurance	Lost income if you can’t operate your LLC temporarily because of covered property damage
Business Owner’s Policy (BOP)	Certain liability claims and property damage claims through a bundle of general liability, property and business income coverages

Professional Liability Insurance for LLCs

As a small business owner, you try hard to keep your customers happy. Unfortunately, mistakes can happen. Our professional liability insurance helps protect you and your LLC if a customer claims you made a mistake, missed a deadline or provided inadequate professional services. This insurance is also known as errors and omissions coverage, or E&O coverage.

Let’s say you own an accounting firm and one of your accountants makes a clerical error. The mistake causes your client to pay thousands of dollars in fees, so they sue your business. Professional liability insurance for LLCs can help cover your legal costs related to their claim.

Professional liability insurance is especially important for LLCs in the following industries:

Consulting and management services
Accounting
Bookkeeping
Marketing
Advertising
Technology
Legal

General Liability Insurance for LLCs

General liability insurance, also known as business liability insurance, can help protect you from claims that your LLC caused bodily injuries or damaged someone else’s property. Liability claims related to work performed off-premises may also be covered under products-completed operations coverage.

If a customer trips over a loose wire at your business and breaks their wrist, this coverage can help pay their medical expenses. 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. If a third party sues your business for libel or slander, this coverage can help pay for your defense costs and settlements.

These kinds of liability claims can happen during everyday operations, so it’s essential to have general liability insurance coverage to help protect your business.

Common Requirement:

Many landlords and clients require proof of general liability coverage before signing contracts.

Complementary Coverages for LLC Insurance

When it comes to insurance for small business, LLCs may also choose to add insurance policies that help safeguard against other liabilities, including:

Workers’ compensation insurance: Most states require businesses with employees to carry workers’ compensation. It gives your employees benefits to help them recover from a work-related injury or illness.
Commercial auto insurance: This helps cover property damage or medical expenses if you or an employee gets into a car accident while driving a company-owned vehicle for work.
Business income insurance: If your business can’t open temporarily because of covered property damage, this insurance can help cover your lost income.
Commercial property insurance: This coverage helps protect your LLC’s owned or rented physical location, as well as the tools and inventory you use to operate. Commercial property insurance also provides business renters insurance for rentals.

business owner happy being protected with limited liability companies insurance

Should My LLC Get a Business Owner’s Policy (BOP)?

Many LLCs choose a Business Owner’s Policy (BOP) because it bundles general liability coverage with commercial property and business income protection in one policy. A BOP may be a good fit if your business has a physical location, equipment or common liability exposures.

How Much Is LLC Insurance Per Month?

LLC insurance costs vary, but The Hartford’s small business customers pay about $141 a month, or $1,687 annually, for a Business Owner’s Policy (BOP). Insurance companies look at different factors to determine a business’ LLC insurance cost, including:

Claims history
Number of employees
Revenue
Business location

Paying your premium in full instead of monthly may help lower your overall insurance costs. The best way to understand your pricing is to get a quote.

This table shows the average cost ranges for a BOP compared to other common types of business insurance from The Hartford.**

Coverage	Average Annual Premium	Average Monthly Premium**
Business Owner’s Policy (BOP)	$1,687	$141
General Liability Insurance (GLI)	$810	$68
Workers’ Compensation Insurance	$1,032	$86
Professional Liability Insurance (PLI)²	$744	$62

Get Limited Liability Company Insurance From The Hartford

We’re an insurance company with more than 200 years of experience, so we know every small business is unique. Our specialists can help you get the right type of LLC liability insurance that fits your needs and complies with state laws. Get a quote today and see how The Hartford’s LLC insurance for small businesses can help protect your company.

Frequently Asked Questions About LLC Insurance

Is Insurance for an LLC Required?

While requirements can vary, most states do require small businesses and LLCs to have certain business insurance coverages. For example, if you have any employees, you may need to carry workers’ compensation insurance. If your business uses vehicles for business reasons, you’ll likely need commercial auto insurance coverage too. Be sure to check with your state laws to find out what your business insurance requirements are.

What Kind of Insurance Should an LLC Have?

Small businesses can start with a Business Owner’s Policy (BOP). This policy combines three essential types of business insurance you may need:

General liability insurance
Business property insurance
Business income insurance

You can also add additional business coverages to a BOP to fit your specific needs.

What Is the Best Insurance for an LLC?

The best insurance for an LLC depends on the type of business you run. However, most LLCs benefit from starting with general liability insurance and professional liability (E&O) insurance. If you want broader protection at an affordable price, a Business Owner's Policy (BOP) is often the best option for small LLCs. A BOP bundles general liability, commercial property and business income insurance into a single policy. You can then add workers' compensation, commercial auto or other coverages based on your specific needs.

Can a Single-Member LLC Get Business Insurance?

Yes, a single-member LLC can — and should — get business insurance. Even if you are the only owner and employee of your LLC, you can still face liability claims from customers, clients or third parties. General liability insurance and professional liability insurance are two of the most common coverages for single-member LLCs. If you hire employees in the future, you may also be required to add workers' compensation insurance.

What Is the Difference Between an LLC and Business Insurance?

An LLC (limited liability company) is a legal business structure that separates your personal assets from your business liabilities. Business insurance is a financial protection product that helps cover the costs of claims, lawsuits and losses your LLC may face. While an LLC limits your personal financial exposure, it doesn’t cover legal fees, medical bills or damages resulting from your business operations. That's what business insurance is for. Together, forming an LLC and getting business insurance can help give your company a stronger layer of protection.

What Types of Insurance Does a Small Business Need?

What Is Liability Insurance?

How Much Is Small Business Insurance?

¹ Premium amounts presented are based on monthly premium paid by The Hartford’s Small Business customers between 1/1/22 and 9/14/23 for 12-month policies. Premium is derived from a number of factors specific to your business and may vary.

Additional disclosures below.

LLC Insurance