Many small business owners structure their businesses as limited liability companies, often abbreviated as LLCs. True to its name, LLC’s business structure limits the extent to which business owners are personally liable for corporate debts or losses.
While an LLC structure provides some protection for your personal assets, it does not protect your business from the costs associated with legal action taken against it. That’s where Business insurance come in.
Here you can find out what you should know about general liability insurance and how it can protect your GmbH.
What does liability insurance cover for LLCs
General liability insurance protects a company’s assets when the company is accused of causing harm to another person or their property. It covers third party claims for personal injury and property damage as well as personal injury and advertising damage.
Companies are exposed to numerous risks every day. If a customer slips and falls in your business, you can pay for medical treatment. You could be sued if your employee makes an accounting mistake with a client’s taxes or if you accidentally damage someone else’s property while on the job.
And even if the claim against you is ultimately unfounded, you could end up hooking your business for thousands of dollars in legal fees.
In these situations, general liability insurance can cover costs related to third party claims against your LLC, including legal and settlement costs.
What general liability insurance does not cover
While general liability insurance will cover your business in a variety of scenarios, this is it kind of insurance alone does not provide adequate protection for most small businesses. Here are some examples of what general liability does not cover:
Harm to your employees. General liability insurance does not cover personal injury for anyone you employ. Instead, you need a Workers compensation Insurance policy to cover medical expenses or other charges related to workplace injury or illness. Some states require employee compensation for all employees in the company – and in some states you must provide this benefit for contract workers as well.
Commercial vehicles. If you or your employees are involved in a traffic accident with a company vehicle, you need commercial auto insurance to cover costs in connection with the repair of your own or someone else’s car or to pay medical bills in the event of personal injury.
Damage beyond your maximum limit. Even if damage falls within the scope of general liability insurance, high bills can still arise if the damage exceeds the amount covered by your policy. To pay this additional amount you will need Surplus liability insurancethat kicks in after reaching a general policy limit.
There are many additional types of insurance products that your LLC can benefit from depending on the scope of work. It’s a good idea to familiarize yourself with their offerings just in case they can provide additional protection.
Many insurers bundle general liability insurance with one or more additional covers within one Business Owner Policy, or BOP, which can mean discounted prices for your company.
How much liability insurance does your GmbH need?
All LLCs benefit from general liability insurance as a single costly loss could wipe out your LLC’s financial resources.
Deciding how much coverage your LLC needs depends heavily on the size and scope of your company’s business, business location, number of employees and contractors, and more. If you are unsure of how much coverage is right for you, consider working with a broker.
Liability insurance costs
Company size (number of employees and contractors).
The nature of your business.
How much business property and equipment you own.
The number of policies you buy.
Coverage Limits and Deductibles.
The average small business can pay anywhere from $ 30 to $ 50 per month for standalone liability insurance, depending on the amount of coverage purchased.