Why an LLC needs business insurance coverage.
Owning your own business has its perks, but there is certainly some responsibility that is required when it comes to being your own boss. That is why many entrepreneurs opt for an LLC structure rather than sole proprietorship. Under an LLC, your personal assets become untouchable. That means if you ever face a liability lawsuit, you are only held accountable for the actions of the company itself. Although an LLC may not be required to buy certain insurance coverage, it is still wise to take out the right protection to safeguard your business. Here’s why.
- Business insurance protects you against a lawsuit
One key reason why an LLC may need business insurance is for protection against lawsuits. Many LLCs form to help protect the owners of the company. Even so, litigation against individual members due to actions of the business is still possible. General liability insurance is incredibly important to obtain as it can protect both the business and owner assets.
- Your industry may require coverage
Not all industries require businesses to purchase liability insurance coverage, but many do – and for good reason. Having this coverage may not just be to protect your business, but to comply with local and state laws.
- Employees need coverage
LLCs with employees also need business insurance coverage. Many small companies forget about insurance until it is too late, which can sink their entire operation. State law usually requires businesses with employees (even if it is just one team member) to carry workers’ compensation insurance.