So, you’ve started a new business and had it registered as a limited liability company (LLC). Congratulations! You’re on the road to protecting what you’ve worked hard to build. You’ve also taken the first big step in reducing your liability and protecting your assets.
If you think you don’t need additional insurance to safeguard your LLC, we’ve got news for you: you do. While an LLC will protect personal property in the event of a lawsuit, that protection is often limited. There are plenty of situations which could make you personally accountable.
For example, if you’ve combined personal and business expenses and go into debt, or if someone gets injured at your business, you could be liable if you’re not fully covered.
Don’t be caught off guard. Here’s three reasons why you need business insurance for your LLC.
To protect your business assets
It’s reasonable to assume that registering your business as an LLC offers you protection, and while it certainly does, as we explained above, it’s simply not enough.
That’s why we recommend all small business owners invest in general liability insurance as soon as they become an LLC. This means that in the event someone falls at your office or shop, for example, their medical expenses will be covered. If you don’t have liability insurance, assets like equipment, materials, and even cash may need to be liquidated.
To protect your personal assets
It’s never a good idea to mix personal and business assets, but if you do, you could be held personally liable in a lawsuit that, in turn, can result in the loss of your personal assets if you don’t have the right insurance.
For example, if you personally guarantee a business loan or your employee gets into an auto accident on the job, you could be putting important personal assets at risk.
You’ll be protected in a lawsuit
Remember when McDonald’s was sued because coffee they served a customer was too hot? It was no doubt an unfortunate experience for the customer, but in the end, she was awarded $2.9 million. Although this happened in 1994, things haven’t changed much since then. Lawsuits for less serious incidents happen every day. And it can happen to your business, too.
In fact, even if your LLC is sued and you’re found not liable, you’ll still have to pay legal fees, cover time off from work and may need to recover from a tarnished reputation. With general liability insurance, however, your assets could be protected from claims by a third party. Some policies even protect against slander and libel. And in the age of social media, that’s more important than ever.
Need to learn more about protecting your LLC with the right insurance? Let the team at Roehr Insurance Services Agency help. Our team of trusted Cincinnati insurance experts can match you with the best insurance plan for your business.
