Do you own a small business that is also a limited liability company (LLC)? While this form of business does provide some protection for your personal assets, your LLC will definitely require insurance coverage in case the worst happening. If you are new to business ownership or finding insurance, the best place to start is usually obtaining general liability insurance for your LLC.
Below we’ll go into why an LLC would need general liability insurance, what it is, and where you can find it. BravoPolicy has also researched the top general liability insurance companies to find the 6 best options for your business.
- The 6 Best General Liability Insurance Companies for LLCs
- What is an LLC?
- What is General Liability Insurance?
- What Does General Liability Insurance Cover?
- Why Do LLCs Need General Liability Insurance?
- What Kinds of Businesses are More Likely to Need LLC General Liability Insurance?
- How Much Does General Liability Insurance for LLCs Cost?
- How to Get Cheap General Liability Insurance for LLCs?
The 6 Best General Liability Insurance Companies for LLCs
We researched more than 20 business insurance companies and here are our recommendations of the 6 best providers of general liability insurance for LLCs.
- Coverwallet: Best for Comparing Multiple Quotes
- Hiscox: Best for Affordable Payment Options
- The Hartford: Best for Reputation
- Next Insurance: Best for Very Small Businesses
- biBerk: Best for Financial Strength
- Simply Business: Best for finding cheap coverage from top-tier carriers
CoverWallet: Best for Comparing Multiple Quotes
An online insurance broker, CoverWallet makes it simple for LLCs to compare general liability coverage quotes. You can find coverage quotes for many kinds of businesses, from retail to legal. Comparing multiple quotes from several companies is the only way to ensure you get the cheapest one.
Their online system also allows you to get quotes for multiple policies, such as commercial auto insurance, commercial property insurance, and general liability insurance. It is an one stop-shop for you to compare multiple quotes of different insurance policies that your LLC might need.
After buying a policy though CoverWallet, you’ll be able to use their digital dashboard to manage all of your business insurance policies in one place. The digital dashboard also offers great features such as downloading the certificate of insurance, filing a claim, or renewing a policy.
Hiscox: Best for Affordable Payment Options
As an insurance company that’s been around for over a century, Hiscox knows what the customers want: affordable premiums!
They provide a range of options for payments and flexible plans, so LLCs can get the insurance they need without the hassle. Hiscox is also a global company with 3,000 employees in more than 14 countries. If your LLC happens to operate outside of the US, ie. your have customers or vendors outside of the US, your LLC will be well protected with Hiscox.
The Hartford: Best for Reputation
If you are looking for insurance companies that have a long history of service, you can’t go wrong with The Hartford. Founded in 1810 in Connecticut, this American-made company has more than two centuries of experience in the insurance game and in working with LLC businesses.
Hartford is also known for its broad range of coverage from cyber insurance to general liability insurance for LLCs. With their long history of working with LLCs, they also have a selection of small business insurance with a section of their site devoted to helping LLCs find the right insurance coverage.
Next Insurance: Best for Small LLCs
If your LLC is a small cafe or family shop, you might only need some general liability insurance. In this case, Next Insurance offers fast, affordable, online quotes and coverage. The company also boasts instant coverage for the self-employed. Most companies can fill out the online forms and get coverage within 10 minutes or less.
They keep their insurance coverage limited to business-related policies only that can include:
- Business Insurance
- General Liability Insurance
- Workers’ Compensation
- Professional Liability Insurance
These are also popular business insurance policies that LLCs might need.
biBerk: Best for Financial Strength
A relatively new insurance company, biBerk was founded in 2015 primarily to provide small business insurance. They have had a strong start though with more than 150,000 policies sold in less than a decade. As a property of the Berkshire Hathaway Company, biBerk also boasts excellent financial strength.
Currently, biBerk offers the following coverages:
- Workers’ Compensation
- General Liability
- Professional Liability
- BOP Insurance
- Commercial Auto Insurance
- Umbrella Insurance
These are also popular business policies that LLCs might need.
Simply Business: Best for finding cheap coverage from top-tier carriers
Simply Business is a digital brokerage firm specializing in serving small businesses. What sets them apart is that they partner with several reputable carriers that have solid financial strength ratings and tend to offer low-cost coverage. That makes it easy for you to find the cheapest general liability insurance quotes with them.
After submitting your information, Simply Business will provide several quotes from partners that they work with. Many of their carrier partners may not be well-known but offer great affordable quotes that you wouldn’t be able to access otherwise.
Getting and comparing several quotes online are fast and simple. Within 10 minutes you will find the cheapest one for you.
Simply Business also has a great customer satisfaction rating on trustpilot.
What is an LLC?
A limited liability corporation (LLC) is a way of formally structuring your business for tax and personal benefits. Essentially, you register your business with the state as an LLC. In return, you’ll receive protection from lawsuits and the ability to take certain tax deductions.
As the owner of an LLC, your personal assets are protected from lawsuits. A plaintiff suing your company for say, failure to provide a service, can’t get at your personal checking account, house, and other personal assets. They can only get assets held by your LLC.
LLCs also allow pass-through taxation. The LLC passes any profits along to the owners who then pay taxes on the income. This differs from a C Corporation that pays business taxes on profits then passes the remainder to its owners who also pay income taxes on the money.
There are many situations where setting up an LLC is beneficial to your business.
- You own a pet shop that sells purebred dogs, but want some extra protection against lawsuits in case a buyer isn’t happy. There are some common diseases that show up in certain breeds, like hip dysplasia in bulldogs. If one of your purebred bulldogs is diagnosed with this condition, the buyer may decide that your shop knew about it before selling a dog to them. If they file suit and win, at least your personal assets are protected.
- You spent decades building a t-shirt printing business with your family. Though it’s officially your business, you want the family to be able to continue running it after you pass. As an LLC, your printing company has perpetual existence, meaning the business continues to exist even if you die. This allows the family to continue operations and fill orders while dealing with separate estate matters.
- You own a small bar that normally does very well, but during the Covid shutdown in 2020, you had to close up shop. In that time, your business ran through any savings and began accruing debts in the form of loans, unpaid rent, and other fees. Your LLC owns those debts so if you need to file bankruptcy you’ll have some protection for your personal assets.
What is General Liability Insurance?
General liability insurance protects you if someone claims that your business caused bodily injury or property damage. It’s commonly called “slip and fall insurance” because it’s what covers you in case someone slips in your building and sues your business for bodily injury.
Further, general liability insurance often covers court costs, property damage claims, medical expenses and the like. It can also help with additional coverage like claims against slander and libel, which forming an LLC alone would do nothing to protect you against.
What Does General Liability Insurance Cover?
As the most common form of business insurance, general liability usually covers these three circumstances:
- Bodily Injury: If a customer slips and falls in your retail store, this insurance can help cover medical costs, defense in a suit, and settlement costs.
- Property Damage: If one of your contractors accidentally damages the brick facade on a customer’s house during a window installation, this insurance can cover repairs, defense costs in a suit, and settlement costs.
- Advertising Injury: This covers defense costs and settlements in case you or your staff commit libel, slander, or copyright infringement against another company.
Some insurance companies also offer additional coverage with their general liability insurance policies. This can include product liability, in which your company is protected if a product you sell causes harm to the customer or damages their property.
What Does General Liability Insurance Not Cover?
General liability insurance for an LLC is still a very limited type of insurance. Many companies will end up purchasing multiple policies to protect themselves in other circumstances. Some similar events that wouldn’t be covered by a general liability policy include:
- Professional Errors: When you make a mistake and give a client poor advice, it’s not covered. You might want professional liability insurance instead.
- Employee Injuries: If one of your staff is injured on the job, this would usually be covered by worker’s compensation.
- Damage to Your Property: Sorry, general liability doesn’t cover damage to property you own. Instead consider business property insurance.
- Damage to a Commercial Vehicle: Sorry again, if your company truck is involved in an accident it should be protected by commercial auto insurance.
Why Do LLCs Need General Liability Insurance?
An LLC can benefit you and your company. It protects your personal assets if someone sues you. A court of law can only go after your business assets, not your personal ones.
Because an LLC protects personal assets, many people assume they do not need general liability insurance. However, that is not the case. An LLC alone cannot protect your business from lawsuits. General liability insurance is one of the most common types of coverage for businesses of all kinds. It provides coverage for legal expenses, fees, settlements, and other related costs of damage to a customer or their property.
Furthermore, an LLC might need other types of insurance depending on what the product and services the LLC sells. For example: if the LCC sells professional advice, it is very likely you will need professional liability insurance, or also called “malpractice insurance” or “errors and omissions or E&O insurance.” Or if the LLC sells a particular physical product such as pet food, it might need to have “product liability insurance.”
What Kinds of Businesses are More Likely to Need LLC General Liability Insurance?
Most LLCs will want the protection of LLC general liability insurance in case of an accident on their property or if one of their staff causes harm or damage during business operations. But, there are some businesses that have less exposure to these kinds of risks, such as:
- Authors/Artists
- Online Retailers
- Website Developers
Generally, if you don’t have a retail location or go to a customer’s property to conduct business, you are at much less risk of damaging property or hurting the customer.
It is still possible to commit advertising injury or need coverage for other circumstances, such as professional error or loss of goods in shipment. So, don’t assume that your LLC can get away without any insurance at all.
What Other Insurance Might an LLC Need?
Speaking of, there are many kinds of coverage that an LLC might need depending on the industry they operate in. Let’s take a quick look at some of the options:
- Professional Liability Insurance: You are a tax preparer who claims deductions on a client’s taxes that they don’t qualify for and the client ends up owing the IRS the money plus additional fees. In turn, the client sues you for the mistake.
- Commercial Property Insurance: It can help you if a pipe bursts in your office causing thousands in damage to computers, documents, and office furniture.
- Commercial Auto Insurance: If a contractor driving the company van to a client’s home for a job is sideswiped by another car, causing major damage to the van you’ll need auto insurance.
- Workers’ Compensation: Should a team member at your sub shop accidentally cut her hand with a knife and need stitches and medication, then workers’ comp. insurance will kick in.
What Affects the Cost of General Liability Insurance for LLCs?
The number one factor that affects how much a small business can expect to pay in insurance premiums is the industry they work in. If the industry has more of a risk of getting sued, the premiums are higher. The highest premiums tend to be for construction and contracting. It’s very physical work and one wrong measurement could mean a roof caving in. Meanwhile, photo and video industries have the lowest premiums because less could go wrong and it often doesn’t involve someone else’s property.
Other factors that could affect premiums include:
- If you have made any claims in the past
- How high you set your deductible
- Which coverage limits you choose
Even your business’ location could affect your premiums, such as if you are in a densely populated area, increasing your foot traffic and risk of a lawsuit. The length of time you’ve been in business and how much your revenue is growing could also affect premiums.
How Much Does General Liability Insurance for LLCs Cost?
In our study, general liability insurance for LLCs costs anywhere from under $300 per year to over $900 per year. The percentage breakdown runs:
- Under $300 per year: 17% of small businesses
- $300-$600 per year: 48% of small businesses
- $600-$900 per year: 15% of small businesses
- Over $900 per year: 20% of small businesses
The median costs run at $42 per month, or $500 per year.
As you can see, costs can vary drastically. Make sure you shop around with a few companies or with a digital broker like CoverWallet to find the cheapest one for your LLC.
How to Get Cheap General Liability Insurance for LLCs?
Since your premiums are dependent on certain factors, there are ways to save money when shopping for cheap general liability insurance for an LLC. Consider a few of these suggestions before you buy:
- Don’t get the first insurance policy you see. Do a little shopping around, such as comparing quotes with a broker.
- Play with the deductibles and limits for your insurance. You can lower premiums a lot by opting for a higher deductible.
- Check your insurance. It’s possible you may be paying for too much insurance coverage. If your general liability covers product liability and you don’t sell any products, consider looking for another policy without it.
- Consider bundling insurance policies. If you have a company vehicle, you may be able to bundle commercial auto insurance with a general liability policy for a discount.
- Consider moving your business. If you have a business that can operate anywhere, you might be able to relocate from a high risk community to a lower risk one and save on insurance coverage.
What are the Most Common Lawsuits Against LLCs? And are they Likely to be Covered by a General Liability Insurance Policy in Place?
Slip and Fall Cases
Most people have heard of the old cliche of a customer falling inside a business and filing suit for thousands of dollars. Well, it does happen surprisingly often. It’s important to protect your business against the costs associated with these kinds of accidents. General liability coverage is exactly the kind of insurance that your LLC will need to cover defense costs.
Property Damage
We’ve mentioned this one before, but it’s also a fairly common occurrence. A general contractor is hired to work on a home remodel. During the renovation, one of their installers damages the client’s home and they file a suit. Thankfully, general liability insurance protects your LLC by paying for the defense costs and any costs to repair the property.
Copyright Infringement
There are also cases when a small business might accidentally infringe on the copyright of another company, such as creating a commercial that is very similar to advertising used by another company. That other company may decide that it is copyright infringement and sue. A good general liability policy with advertising injury protection could help protect this small business.
Wrongful Termination
Another very common type of lawsuit that LLCs face is a wrongful termination or employment discrimination lawsuit. An employee that was fired by the business may opt to file a lawsuit claiming that they were fired for discriminatory reasons. This isn’t the kind of instance covered by general liability insurance though. Instead, it would be covered under “employment practices liability insurance,” which protects against claims of:
- Harassment
- Wrongful Termination
- Discrimination
- Failure to Promote
Breach of Contract
Small businesses that offer services or sell goods on contract to other companies may encounter a situation where they can’t deliver on those promises. It’s possible for the other party to file a suit for breach of contract. Insurance doesn’t always cover breach of contract, unless it was something out of the company’s control. Plus, general liability insurance isn’t the right type of coverage for this situation anyway.
The best option would be something like professional liability insurance for services rendered. The LLC might also want “cargo insurance” to recover the costs of merchandise that was enroute but was lost for some reason.
Final Thoughts:
- General liability insurance protects LLCs against third-party injuries, third-party damages, and advertising injury claims.
- A limited liability company is a way of structuring your small business to protect your personal assets, such as a savings account.
- It can be difficult to find online quotes for general liability insurance for an LLC. Thimble does provide instant quotes, depending on the industry your business is in.
- If your business operations involve working with people, visiting their property, or has a retail or onsite location, it’s a good idea to consider general liability insurance for LLCs.
- Some common lawsuits that LLCs face which are covered by general liability insurance include slips and falls, copyright infringement, and property damage claims.
