A limited liability corporation (LLC) is an important part in separating your professional and personal assets, protecting your finances, and securing the future of your business. However, many LLC owners mistakenly assume this entity offers so much protection that additional insurance isn’t necessary. The reality is that without additional coverage through business insurance, your company is at risk.
Why LLCs Need Business Insurance
LLCs generally prevent your personal assets from being tied to your business. In other words, if your company is sued, you can’t lose your house or retirement account. Unfortunately, there are still some cases in which your assets could be in jeopardy.
If a customer or vendor slips and falls in your office, or if you act negligently and cause damage to someone else’s property, your business could be sued. To pay for the damages, business assets such as equipment, cash, materials, and more may have to be liquidated to pay for the other person’s medical bills or property replacement.
Additionally, if you personally guarantee a business loan, a lawsuit filed against your LLC could impact your personal assets.
Another concern to keep in mind is that lawsuits are expensive. If your business is sued, and you are not found liable, you could still be forced to pay for legal defense costs out of pocket. Your professional reputation may also suffer. These costs can be substantial and severely impact your business finances.
For these reasons and more, most small business owners with LLCs acquire business insurance.
The Basics of Insurance for LLCs
If you have formed an LLC, you need to purchase business insurance coverage in order to protect your assets to the fullest extent.
A business owners policy (BOP), which combines general liability and property insurance, is ideal for LLCs. While general liability insurance covers your business in the event of several types of risks, including personal injuries and property damage, property insurance protects your business in the case of claims regarding damage to another person’s property.
Depending on your industry and business, other types of insurance coverage may be encouraged or even required, including workers compensation insurance, business interruption insurance, commercial vehicle insurance, and more. Talk to an experienced insurance agent to determine what types of business insurance coverage to secure for your LLC.
Contact Melton McFadden for Business Insurance Coverage in Michigan
At Melton McFadden, our experienced insurance professionals can help you develop a business insurance plan that protects your business, employees, revenue, and peace of mind. We are ready to guide you through the process of identifying areas of risk, finding gaps in your current insurance plan, and creating a business insurance solution that works best for you and your company.
Whether you are looking to protect your inventory against loss or secure additional insurance for your business, we’re here for you every step of the way.
Contact us today or request a free quote to get started.