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5 Reasons Why LLCs Need Business Insurance

You’ve officially formed your limited liability company (LLC). Now it’s time to sit back, relax and wait for the cash to pour in, right? Not exactly. Before you can hit the ground running with acquiring new clients and establishing your reputation, you need to protect your vulnerable new venture from financial disaster before it even gets a chance to take off.

Think about it this way: you’ve already poured significant time and money into filing the necessary documentation to make your LLC official. Every decision you’ve made up until now has a little bit of your heart and soul in it, from the name to the mission statement. You need

business insurance for your LLC
to safeguard your company’s finances in the face of various risks.

Here are five reasons why LLCs—including yours—need business insurance.

A client requests proof of insurance before signing a contract

You’ve been working on this client for weeks. From practicing your pitch in the mirror a dozen times to sending the perfect follow-up fruit basket, you’ve pulled out all the stops. And today’s the day they’re going to let you know if you’ve earned their account.

The U.S. Small Business Administration

that "oftentimes a client will request evidence of your certificate of general liability before doing business with you—another good reason to secure a policy before it holds up any potential new work." Don’t let a lack of insurance coverage be the reason you have to kiss your chances at signing a make-or-break client goodbye!

A competitor alleges you copied their logo design

You’re new at this LLC thing, but you think it’s going swimmingly. That is, until you get a letter in the mail from a competitor accusing your company of infringing upon their logo. General liability insurance, in addition to covering property damage and personal injury to third parties, covers

advertising injury
claims. If the case goes to court, your LLC could be in serious financial trouble without a liability policy in place.

Your first client takes your advice…for better or for worse

Your professional advice and services have the power to impact clients’ bottom lines. While you use your expertise to provide the soundest recommendations possible, you can never be 100 percent certain of the outcome. Professional liability insurance

your LLC against "liability for committing an error or omission in performance of professional duties."

Your office is out of commission for several weeks following a natural disaster

Whether it’s due to a burst pipe, a windstorm, an electrical fire or some other unforeseen catastrophe, your LLC could find itself floundering without its premises and equipment. On top of assessing the damage, your utility bills don’t magically stop in the face of a tragedy.

A Business Owners Policy complete with property insurance and business interruption coverage can help you maintain and re-establish your business in the wake of a damaging event. As Chron

points out
, business interruption coverage can help by covering costs for temporary rental space, rushed inventory orders and contracting out certain workflows until you can find your footing again.

Your employee throws their back out moving merchandise

Your LLC may be small, but it is mighty. Your employees all go above and beyond the call of duty. You can return the favor by protecting them with workers compensation coverage. In addition to being a legal requirement in most cases, workers comp takes care of medical bills, rehabilitation and missed work due to job-related injuries.

Eager to help your LLC put its best foot forward? When it comes to business insurance for an LLC, nobody makes it easier to compare policy options than CoverHound.

Get your quote

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.
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