LLC Insurance: What Coverage You Need, Best Options
LLCs need general liability insurance or a business owner's policy, and potentially more. Most can buy coverage online.
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LLC owners should have business insurance to protect their business’s assets and comply with contracts and laws.
Every LLC should have one of these policies:
- A business owner’s policy, or BOP. This protects your business in case of property damage, like burglary, fire or most natural disasters. It also includes liability insurance. Get a BOP if your business rents or owns space or has inventory or equipment.
- General liability insurance. This protects your business from certain types of lawsuits. If you don’t have property, get general liability insurance instead of a BOP.
You might need more coverage depending on what your LLC does.
Most LLCs can buy some of their insurance online. But if you have questions about what you need, find an insurance agent for help.
Save up to 30% on business insurance
NerdWallet Small Business helps you get realtime quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
Best insurance companies for LLCs
NerdWallet’s editorial team chooses the best business insurance companies based on these factors:
- Relatively few complaints from policyholders to regulators.
- High financial strength ratings from credit rating agencies.
- Online quotes that let you estimate your costs quickly.
Here are some top options that can meet the needs of LLCs. We recommend getting several quotes to find the best coverage at the best price.
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Ergo Next
Ergo Next says it can identify the policies your LLC needs and provide a quote within minutes. Then, you can complete your purchase online. You can also access your certificate of insurance online and share it as needed. Read NerdWallet’s review of Next small-business insurance.
Chubb
Chubb offers a straightforward business owner's policy that is easy for an LLC owner to buy online. Their business owner's policy combines general liability insurance with business property and business interruption insurance. It also includes extra expense coverage and accounts receivable coverage, which aren’t always part of BOPs. Read NerdWallet’s review of Chubb small-business insurance.
Nationwide
Independent insurance agents sell Nationwide policies around the country. Use Nationwide’s search portal to find an agent and get started. Since these agents are independent, they may or may not recommend a Nationwide policy. But the company offers virtually every type of business insurance that LLCs need. Read NerdWallet’s review of Nationwide business insurance.
Thimble
If you need insurance only for a specific event or job — maybe to comply with a contract — look into Thimble. The brokerage sells short-term policies that cover you temporarily. That will likely be cheaper than buying a year-long policy. Thimble also offers a program called Certificate Manager that you can use to make sure any contractors your LLC hires have the coverage you require. Read NerdWallet’s review of Thimble business insurance.
Hiscox
Hiscox offers a wide variety of coverage packaged in different ways for businesses in 180 industries. Notably, its professional liability insurance covers work performed anywhere in the world, though you must file claims in the U.S. or Canada. Read NerdWallet’s review of Hiscox small-business insurance.
Save up to 30% on business insurance
NerdWallet Small Business helps you get realtime quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
What is LLC insurance?
There’s no specific type of business insurance called “LLC insurance.” Instead, most LLCs need a few different policies.
Many LLCs start with a business owner’s policy. This package includes liability insurance, which can help cover your legal fees and settlement costs for some lawsuits.
BOPs also include property insurance. These policies protect your business’s inventory, equipment and space against burglary, fires, natural disasters and more.
What does LLC insurance cover?
That depends on the type of coverage your LLC gets. Most need several of these policies:
| Insurance policy | What it covers | Who needs it |
|---|---|---|
| BOPs normally include general liability insurance, business property insurance and business interruption insurance, which makes up for lost income if your business has to pause operations because of a covered loss. | LLCs that have property to protect, like space, inventory or equipment. | |
| Protects your business against bodily injury and property damage claims filed by customers and other third parties. | If your business doesn’t have property, get general liability insurance instead of a BOP. | |
| Protects your business against claims that you made a mistake that resulted in a loss to your customer. In many industries, it’s called errors and omissions insurance (E&O). | LLCs that provide services to customers for a fee. | |
| Provides coverage if you or your staffers use a vehicle in the course of doing business. | LLCs that own or rent a business vehicle. | |
| May be legally required if you have employees (regulations vary by state). It will help cover your staff's medical bills and lost wages if anyone is injured on their job. | LLCs that are required by state law to have workers' comp. Learn more about your state's regulations here. |
Additional coverage for your LLC
There are lots of other types of business insurance that protect against specific risks. These include:
- Liquor liability insurance, which you need if your business gets steady revenue from alcohol sales.
- Product liability insurance, which you need if you sell physical goods.
- Cyber insurance, which you need if you store customer data.
Not sure what you need? Find an independent insurance agent near you. They can help you understand your risks and get the right coverage.
Does LLC insurance cover contractors?
Most business insurance policies don’t cover 1099 independent contractors.
Hiring contractors doesn’t necessarily create more risk for your business. If someone thinks one of your contractors harmed them, they could sue your LLC. Your business insurance should protect your LLC in that case — but it probably won’t protect your contractor.
If you have contractors, take these steps:
- Ask your subcontractors to carry their own liability insurance. That makes sure they’re protected if someone sues them as well as your LLC.
- Consider asking your subcontractors to list your LLC as an additional insured. That way, if either they or your LLC are sued, their policy should pay out to cover your legal bills too.
- Get hired and non-owned auto insurance coverage. This will protect your LLC’s assets if one of your contractors crashes a car or truck on the job and that results in a lawsuit.
If another business hires your LLC, make sure you have your own independent contractor insurance. Don’t count on their insurance to cover you.
Why do LLCs need business insurance?
Having an LLC protects your personal assets. Getting business insurance protects your company’s assets.
When you form your business as an LLC, or limited liability company, you add a layer of protection for your personal finances. If someone sues your business or you face bankruptcy, an LLC should protect your personal assets — as long as you haven’t mixed your personal and business finances or broken the law.
But you should safeguard your business finances too.
Say your LLC is held responsible for damaging someone’s property or making a mistake that cost your client money. It might have to pay legal costs, settlement costs and more. LLC insurance can help protect your business finances in cases like those.
How much does LLC business insurance cost?
The cost of business insurance for your LLC can vary widely. For starters:
- All LLCs should carry general liability insurance. Premiums for those policies range from $700 to $3,000 per year (roughly $58 to $250 per month) for businesses with $1 million or less in annual revenue, according to data that online brokerage Coverdash shared with NerdWallet.
- For professional liability insurance, that range is $1,200 to $2,200 per year ($100 to $183 per month).
Where you fall in that range depends on factors like:
- What industry you operate in. Some, like construction, are inherently more dangerous and see more lawsuits.
- How many employees you have. Every employee interaction creates a chance for a lawsuit, unfortunately. The more people, the more chances.
- Whether you’ve filed claims in the past. Insurance companies tend to see previous claims as evidence that your business is riskier than others.
- How new your business is. Brand-new businesses don’t have a track record of safe operations. Longstanding ones with few claims do.
- How much your property is worth. The more you have that could be destroyed by a fire or disaster, the more the insurance company might have to pay out in the event of a claim.
How much coverage does your LLC need?
That depends on what types of coverage you’re buying. Here’s how to parse the most common types of business insurance. If you think you might need more or less coverage, talk to an insurance agent.
General liability insurance
A standard general liability policy offers $1 million per claim and $2 million in total coverage over the life of the policy (usually a year).
Low-risk small businesses, like consultants, might get by with less than that. If your business has lots of customers or a public-facing storefront, consider more.
Business owner’s policies
Many small businesses purchase a $1 million/$2 million BOP. Like with general liability insurance, that means the insurer will pay out up to $1 million per claim and $2 million total over the policy term.
That’s usually a good place to start, especially if you live in a place with relatively low risk from natural disasters. If your location is prone to disasters or theft, shop around for higher limits.
How to get business insurance for your LLC
Follow these steps to get the right insurance coverage for your LLC:
- Find out what coverage is a must. For example: Do you have employees? Make sure you understand your state’s workers’ comp rules.
- Decide how much coverage you need. This will determine how much your insurance costs. Do you just need coverage because a business partner asked for it? Then a low limit might be enough. Does your LLC have property a fire could damage? More coverage might provide an extra layer of security.
- Get an agent, if you want one. If you want personalized help understanding your risks and finding coverage, use an independent agent or broker. This is a professional who will help you get multiple quotes and buy a policy. In general, working with an agent takes longer than buying insurance online. But it can be helpful if you’re in a high-risk industry like construction.
- Get a few quotes. Every insurance company approaches pricing differently, so they’ll all charge a different price. Getting a quote is the only way to know for sure how much a policy will cost for your LLC. You can use an online brokerage like Coverdash or Simply Business to generate multiple quotes at once.
- Compare coverage. It’s easy to see which premiums are lowest. But double-check the policy limits, deductible and whether it excludes any particular scenarios.
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Methodology
Business insurance ratings methodology
NerdWallet’s business insurance ratings reward companies that offer small-business owners reliability and ease of use. Ratings are based on weighted averages of scores in several categories, including financial strength, customer complaint data, shopping experience and customer service. Learn more about how we rate small-business insurance companies.
These ratings are a guide, but insurance policy details and prices can vary widely from business to business and provider to provider. We encourage you to shop around and compare several insurance quotes.
NerdWallet does not receive compensation for any reviews. Read our editorial guidelines.
Insurer complaints methodology
NerdWallet examined complaints received by state insurance regulators and reported to the National Association of Insurance Commissioners in 2018-2021.
To assess how insurers compare to one another, the NAIC calculates a complaint index each year for each subsidiary, measuring its share of total complaints relative to its size, or share of total premiums in the industry. To evaluate a company’s complaint history, NerdWallet calculated a similar index for each insurer, weighted by market shares of each subsidiary, over the three-year period.
Our star ratings consider ratios for both general liability insurance and commercial property insurance. When an insurer sells policies that are underwritten by several different insurance companies, we consider the NAIC complaint ratios of all the underwriters.
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