How does an LLC protect you in a lawsuit? Or do I need small business insurance?
Many small businesses are formed as what’s called a limited liability company or LLC. This business structure is a hybrid legal entity that combines aspects of a corporation and a sole proprietorship or partnership. How does an LLC protect you in a lawsuit? That’s something many business owners ask, and it’s understandable that they have that question.
Because “liability” is in the name of this type of entity, it would be easy to believe that operating in this mode protects your company from legal liability and lawsuits or, at a minimum, limits the liability that the business can face. However, that’s not the case.
An LLC might protect your personal assets from business-related claims, but that doesn’t mean that the company itself is immune from liability. So, it’s crucial to have small business insurance to protect your business from lawsuits.
Read on to learn more about getting insurance for your LLC.
Why is insurance for small businesses important?
There are many types of business insurance, including:
- Workers’ compensation insurance
- General liability insurance
- Business owners policy or BOP (also called property & liability insurance)
- Professional liability insurance (also called errors and omissions or E&O)
- Commercial auto insurance
- Umbrella insurance
- Cyber insurance
Each addresses different types of risk. Having the right coverage is crucial because it protects your business from the potentially crushing financial burden from liabilities or losses.
We explain the different types of insurance for small businesses on our website. But if you have questions after checking out that information, our licensed insurance experts are happy to answer them. Contact us at your convenience.
Determine your cost with a small business insurance quote.
Small business insurance policies like professional liability, workers’ compensation, general liability, commercial auto, umbrella, cyber, or a business owners policy (BOP) are surprisingly affordable, especially when you consider the amount of protection they provide. You can get specifics in a small business insurance quote for any type of insurance you need in a matter of minutes online.
Can I request a COI for my small business insurance online?
Buying small business insurance from biBerk online is as fast and easy as getting a quote, and the coverage is effective as soon as the next day. That’s a relief to many business owners when they realize they need financial protection!
Once you buy a policy, you can get a Certificate of Insurance (COI) from our website. It’s free, and the ability to download or send a certificate without delay can be important if you need the document to win business from a new client or to give to a landlord who requires it when you’re signing a lease.
If you need to note what are known as "Additional Insureds" on the COI, that’s an easy notation for us to make. Just give us a call before you download the document and we’ll take care of it.
We help all types of business professionals.
Business insurance is essential for small businesses of all kinds and the people who own and operate them. We work with many types of business professionals.
Aspiring entrepreneurs
People starting a new venture often ask us questions like, “Can an LLC be sued?” or “How does an LLC protect you in a lawsuit? We always recommend talking with a business attorney about those kinds of legal topics. But when they ask, “Does an LLC need insurance?” or “Does business insurance cover lawsuits?” we reply, “Yes,” and “It definitely can.” They’re glad to learn that insurance can protect them from financial setbacks so they can stay focused on growing their businesses.
Established small business owners
Owners whose businesses have been operating for a while often have industry-specific issues they want to address. For example, they might need insurance like an errors & omissions (E&O) policy that can protect them in client disputes. Or they might just want to be shielded from everyday risks, like slip-and-fall accidents at their business locations. And they need business insurance for an LLC that can scale with their businesses as they grow.
Freelancers and independent contractors
People who operate solo also value the protection of an E&O policy (also called professional liability insurance), as they often face the risk of client lawsuits. They buy other policies, too, with the goal of ensuring business continuity in the face of unexpected expenses.
Protect your company with small business insurance.
Does being an LLC protect you from being sued? Now you know it doesn’t. But business insurance for an LLC can be an essential part of protecting your company financially.
Whatever types of coverage you need, it’s important that you secure them as soon as possible. The costs associated with even one incident have the potential to bankrupt an uninsured or underinsured small company. But the right insurance policies can protect your LLC from lawsuits and give you peace of mind so that you can focus on achieving your business goals.