As an LLC (Limited Liability Company) owner, it’s easy to feel secure in the knowledge that your business’s liability is limited to the company’s assets˳ However, that doesn’t mean you’re completely immune to liability claims˳
When someone sues your LLC for damages or injuries, the damages may exceed your company’s assets, which could force you to pay out of pocket or even shut down your business˳ That’s where general liability insurance comes in˳
What is General Liability Insurance?
General liability insurance is a type of insurance policy designed to protect businesses against liability claims from third parties˳ It covers claims for bodily injury, property damage, and personal injury, as well as lawsuits related to false advertising, defamation, and other claims˳
Typically, a general liability policy will cover the costs of legal defense and settlement or judgment in the case of a covered claim˳ The policy also provides some protection against litigation costs and the expenses of a trial˳
Why LLCs Need General Liability Insurance
While an LLC does provide some protection against personal liability, it doesn’t shield you from all possible scenarios˳ These scenarios could include:
● Bodily injury: If a customer falls and injures themselves on your business’s property, they could sue you for damages˳
● Property damage: If you or an employee damages someone else’s property while on the job, you could be sued for repairs˳
● Copyright infringement: If you use someone else’s creative work in your marketing materials without permission, you could be sued for copyright infringement˳
● Libel or slander: If your business is accused of making false or defamatory statements about a person or entity, you could be sued˳
In all of these scenarios, general liability insurance could provide coverage, protecting your business against financial damages when legal claims arise˳
How Much Coverage Do You Need?
The amount of coverage you’ll need will depend on factors such as the size and scope of your business, the risks you face, and any regulations governing your industry˳ As a general rule, most small businesses opt for coverage in the range of $1 million to $2 million˳
Remember, carrying adequate general liability insurance is not only a financial safeguard but also a way to protect your business’s reputation and goodwill˳
Conclusion
As an LLC owner, you already have some protection against personal liability˳ However, it’s important to understand that your business can still be sued for damages or claims stemming from its operations˳ General liability insurance provides an extra layer of protection, saving you from the risk of out-of-pocket costs or business closure˳
