As we have previously discussed, LLCs are a great way to protect company assets, but this corporate structure is not a replacement for actual insurance coverage. Insurance for LLCs should still be a consideration. Let’s take a closer look at why.
You Can Still Be Sued
In an article on Legal Zoom about LLCs, it is noted that forming an LLC makes a company a separate entity from the company owners. In the eyes of the law, the company “can own money and property, have a bank account, make agreements, sue people, and be sued.”
While the corporate structure may protect individual owners from legal liability for company activities, it does not protect the company from being sued. Lawsuits cost money. The best prepaid legal option a company can have is a solid commercial general liability policy to protect against both nuisance claims and legitimate lawsuits.
There’s an insurance policy for that: General Liability.
You Can Still Make Mistakes
Many professional businesses such as lawyers and doctors cannot form LLCs in certain states. If your business is formed as an LLC the corporate structure does not protect you or the business from decisions made by professionals within your company that result in damage or loss to your customers.
There’s an insurance policy for that: Professional Liability / Errors & Omissions
You Can Still Suffer A Property Loss
The physical assets of your business such as your equipment, furnishings, and buildings are still vulnerable to damage or loss. Fire, theft, hurricanes, earthquakes, floods and other natural disasters won’t stop at your front door due to your corporate structure.
Other Coverage To Consider
In addition to the policies above, your insurance broker can help protect your other business assets:
- If you have owned company vehicles? Commercial auto insurance.
- If you have employees? Workers Compensation insurance.
There are many other insurance coverage lines available for health/medical insurance, employee benefits liability, pollution liability, etc. Check out the Hayes website for descriptions of available coverage.
The Bottom Line
One of the first steps you take when starting a business should be to determine your corporate structure. LLCs offer a great way to protect personal assets from your business liability. However, your business liability still needs to be protected.
The right insurance policies can help you do that. Call Hayes today to schedule a free, no-obligation risk management analysis to find out which insurance policies are right for you.