A limited liability corporation (LLC) structure for your business gives you the best features of a partnership and a corporation. In particular, you get to limit your exposure to the kind of unlimited financial risk that comes along with a partnership business structure. And it’s easy and inexpensive to start your LLC, so you and your team can get right to work on your business goals, instead of sinking time into extensive filings and setup requirements. That convenience is part of the reason more than 2 million businesses have set up as limited liability corporations since the LLC was invented 40 years ago.
Even though your personal liability is limited in an LLC, your business can still face some pretty big liability risks, even if you’re in what most people think of as a low-risk industry. That’s because some risks are universal, like falls that send someone to the doctor, accidents that damage property and statements that get interpreted as slander.
To safeguard your business against these common but often uncommonly costly risks, your LLC needs general liability coverage. Not sure what general liability coverage does or how it can help protect your business? Read on—we’ve got the basics covered for you.
General liability insurance explained
That’s because general liability coverage protects businesses from injury to third parties or damage to their property. At Thimble, we consider it the most essential insurance a business can have.
For example, workers’ comp covers injuries to your own employees on the job, but what about a customer who trips in your garage? Workers’ compensation won’t pay those medical bills.
Your commercial auto policy shields you from risk if your employee hits another vehicle with the company truck. But it won’t help if one of your employees drops a pallet of shingles on a client’s car in their driveway.
Commercial property coverage protects you in case thieves break into your workshop and steal your tools. But who’s responsible if one of your welders accidentally burns down a client’s toolshed? (Spoiler alert: probably you.)
Depending on the size of your business and the size of the lawsuit a third party might bring, any one of these scenarios could do serious financial damage to your business, unless you have general liability coverage.
When can someone make a general liability claim?
General liability insurance protects your LLC in cases where a third party—like a customer, client, vendor or visitor—gets hurt or suffers some sort of property damage on your premises or because of your business. Think about the kind of risks your business faces in these kinds of situations:
A subcontractor with your flooring specialty LLC accidentally breaks a floor-to-ceiling window in a client’s home. Your business is responsible for the cleanup, window replacement, and protection for the contents of the client’s house until the new custom-order window is installed.
One of your tax clients brings his son to a meeting in your office. The child slips and hits his head on the edge of a table in your lobby. He needs a trip to the emergency room and stitches. The client expects your business to pay because the injury happened on your property.
A former employee claims that you have been badmouthing her to prospective employers and she can’t get hired. She’s filed a lawsuit against your business, and you need to hire a defense attorney.
Without general liability coverage, your business would be legally and financially responsible for handling these situations and others like them out of pocket.
It’s important to keep in mind that the “limited liability” in “limited liability corporation” only refers to how financially responsible each partner is for the other partners’ actions and for the company’s debts. Your LLC protects you from losing your house if your business falls into debt. But your business structure doesn’t protect you against the kinds of claims that a general liability policy can, like:
A client slips on the freshly mopped floor in your office lobby and breaks a wrist. Your general liability coverage is there to protect you against their injury claim.
Third-party property damage
Your client brings a high-end laptop into your shop for repair. Your assistant accidentally knocks it off the workbench and wrecks it. General liability insurance can prevent you from having to pay out of pocket for the damage.
Defense and related costs
The client with the damaged laptop hadn’t backed up their work, and now they’re suing you. You need a defense to protect your business in court. With a general liability policy, your policy provides claim investigation and defense.
Personal and advertising injury
A competitor claims that you said something untrue and damaging about their business in your latest ad campaign. Without general liability insurance, you could be responsible for handling an expensive lawsuit or settlement.
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What’s not covered by general liability insurance for LLCs?
General liability insurance is a must for reducing slip-and-fall, third-party property damage and personal and advertising injury risks. However, this kind of policy doesn’t handle every type of risk your LLC may face. General liability policies don’t cover:
- Claims arising from incidents involving company vehicles
- Claims related to your professional services
- Claims that were known before your LLC bought general liability coverage
- Damage to LLC’s property and equipment
- Data breaches
- Employee injuries on the job
To protect your LLC from these kinds of risks, you may need to add a few other policies.
Commercial auto insurance, professional liability insurance, commercial property coverage, cybersecurity insurance, and workers’ compensation insurance are some of the options you may want to explore, if you don’t already have them.
Shield your LLC from risk
Your limited liability corporation gives you flexibility and protection that can free you to focus on growing your business instead of dealing with complex regulations or stressing out about risks incurred by your business partners. However, it’s still wise to protect your business from other kinds of risk with a general liability policy for your LLC.
Now, you can get your LLC’s general liability coverage tailored to your needs and your timeline. Thimble arranges business insurance that you can purchase when you need it, how you need it—by the month or by the job, from an hour to a year. With the options Thimble gives you, you can save money with smarter coverage and avoid the risks of going without liability insurance.
Ready to get covered? Click “Get a Quote” or download the Thimble app. Enter your ZIP code, type of business, and how long you need coverage. Review your quote, buy your policy and you’re done—ready to get on with your business.
The whole process takes about 60 seconds, and as soon as you’re done, your Certificate of Insurance lands in your email inbox. Check in on the Thimble app whenever you like to review your policy and make any changes you need. Ready to reduce your LLC’s risk exposure? Get your quote now.