A limited liability company (LLC) is a preferable business structure due in part because of the level of security it offers owners when it comes to their personal assets. But while you’re able to limit your personal liabilities, your business assets are still without protection against a variety of possible unfortunate events. The good thing is that there are things you can do to minimize the risks that come with your LLC — one of these is investing in necessary business insurance. To make sure your business is protected, here are the types of business insurance your LLC will need.
General Liability Insurance
General liability insurance protects you from “general” claims against your business, including third party injuries, damages to property, and possible medical and legal costs. General liability insurance is priced depending on your location and the coverage you need. For example, the general liability insurance for New York LLCs can cost anywhere from $300 to $5,000 annually.
Commercial Property Insurance
Your place of business holds a great deal of assets, including documents, equipment, and the value of the property itself. Property insurance protects you from perils such as faulty plumbing, fire explosions, theft, and storms. It is also a good idea to assess additional risks depending on your business location. Some areas are prone to natural disasters, such as earthquake-prone Nevada and flood-prone Florida. These aren’t typically covered by property insurance policies, so consider adding these as premiums if you’re in a high-risk area.
Business Interruption Insurance
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Business interruption covers the income that would’ve been earned if no losses had happened to the business. The Insurance Information Institute mentions that this can in turn also help in mortgage or lease payments, loan payments, and employee payroll that cannot be paid during restoration. This is especially important as each day of business yields a great deal of income — the loss of which can greatly affect the financial position of your LLC.
Workers Compensation Insurance
Unforeseen events can wreak havoc and injure members of your staff despite how much effort you put into making the environment safe. Lately, due to the COVID-19 pandemic, workers compensation insurance has once again proven its importance, sustaining businesses and policyholders throughout the pandemic. Workers compensation insurance covers medical and legal costs due to workplace injuries, protecting you from financial liabilities that are detrimental to your business. Most states like Arizona mandate workers compensation insurance even if your business only has one employee, while states like Alabama only require it if you have five or more employees. Make sure you are following the correct process as it can lead you to penalties should you fail to comply.
Insurance by Industry
Depending on the industry you’re in, you may have special requirements or recommendations when it comes to insurance policies. For example, restaurants in various states like Massachusetts can apply for restaurant insurance, which covers cases of food spoilage and contamination. Meanwhile, construction companies operating as an LLC in California are required to have at least $1 million in liability insurance, and $100,000 in worker bonds. It’s always the best course of action to double-check state requirements as well as industry-specific mandates.
Businesses will always be subjected to internal and external factors that can jeopardize its viability. While it’s burdensome to think about what your LLC may encounter, it’s crucial to make sure you’re protecting your hard-earned success. In a global industry full of risks, the most successful businesses confront these possibilities head-on. They’re able to dream big with the peace of mind that comes from being prepared for the worst that could come.