Does Your LLC Need Small Business Insurance? (PA Edition)

Jun 17, 2024 | Business Insurance

Did you know there are over 33 million small businesses in the United States? Many entrepreneurs register their business as a limited liability company (LLC). An LLC offers protection for your personal assets, separating them from your company’s liabilities. But is that enough to protect your small business after a lawsuit or another challenge? 

Probably not. While an LLC shields your personal assets, it doesn’t eliminate the risk your business could face. Unexpected events like property damage, customer lawsuits, or employee injuries can financially threaten your business and make it impossible to continue your small business dream. However, with the right small business insurance, you can have peace of mind knowing that your personal assets are secure and your business can continue to operate even in the face of such challenges. 

That’s why most — if not all — LLCs should have small business insurance. However, the type and amount of business insurance you need will vary. Learn more about small business insurance solutions and which ones may be right for your LLC. 

Does an LLC Need Business Insurance? 

It’s true that an LLC shields your personal assets from business liabilities. Business insurance is still essential for most PA businesses, though, because: 

Limited Liability Is … Limited 

An LLC shields personal belongings like your car or house from business debts and lawsuits. But it doesn’t protect your business assets. If a fire destroys your office equipment or a customer sues you for negligence, the financial burden falls on your business. That could bring your operations to a halt or potentially even force you to close for good. 

Lawsuits Are Expensive 

Even frivolous lawsuits can be a drain on company capital. Legal fees and potential settlements can add up fast and decimate company profits. Insurance can protect you from the cost of a lawsuit, including legal costs and potential payouts. 

Employees Can Get Injured

If you have employees, insurance is not only a good idea but probably mandatory. It will cover the employee’s medical bills, lost wages, and rehabilitation costs for work-related injuries, protecting your bottom line. 

So, while registering as an LLC can be a smart choice for small businesses, it’s not a substitute for a good insurance policy. 

What Insurance Coverage Does an LLC Need?

There is no blanket small business insurance policy. Instead, as an LLC owner, you’ll want to select from different policies to custom-build coverage suited for your business. Some of the coverage options include: 

But do you need all of these? Maybe. More likely, you’ll need to choose from this list based on different factors like the type of business, whether you have company vehicles, and where your business is located. These factors will influence the types and amounts of insurance coverage your LLC needs. 

You’ll need to ask yourself questions like: 

  • How much risk is associated with your business or industry? If you own a construction firm, you’ll want more general liability insurance than someone who owns a home crafting business, for example. 
  • How many employees do you have? If you don’t have any employees, you can skip the workers’ compensation insurance for now. You’ll need to take out a policy if you have even one.
  • Where is your business located? High-crime areas will need more property insurance, for example. You may need a different policy if your business is located at home. 
  • How much revenue does your business generate annually? The more revenue you generate, the more coverage you’ll want so you can protect yourself from business interruptions. 

At a minimum, an LLC will want general liability insurance. Working with an experienced insurance broker can help you determine the right level of coverage based on your risk. 

Customized Small Business Insurance Solutions From Eber

Forming an LLC is a good start for protecting your business. But don’t stop there. Comprehensive small business insurance acts as a shield for your small business, protecting it from unforeseen events and financial setbacks. 
Contact Eber & Associates today for a free quote on your small business insurance in PA. Our experienced team will guide you through selecting the right policies for your unique needs. Then, we’ll find the best policies at the best prices so you can return to building your small business dreams.