What is Limited Liability insurance?
Limited liability insurance is a type of business insurance that shields an owner or partner in a corporation, limited liability company (LLC) or a limited liability partnership against the financial aftermath of litigation. It falls into the general category of business liability insurance.
Normally, legal structures insulate an owner’s personal liability for the debts of the business (though the owner of a company is still liable for their acts and omissions). Limited liability insurance kicks in at that point to fund a legal defense and, if needed, help pay for court-imposed financial settlements or judgments.
What does Limited Liability insurance cover?
Limited liability insurance activates when your personal assets outside the business come under attack in a legal dispute.
It covers losses from non-employees who:
- Get hurt at your place of business.
- Have their property damaged while you’re on the job.
- Suffer a non-physical personal or advertising injury.
- Get hurt while using your product.
Other small business insurance, including general liability, take the lead to protect against such claims. But if your general liability policy doesn’t cover the full claim amount, and a plaintiff targets your personal assets, limited liability insurance can ride to the rescue.
How much does Limited Liability insurance cost?
A limited liability insurance policy cost can vary. The price scales based on the size of the corporation or LLC, the nature of its business, its annual revenue and its number of employees.
Who needs Limited Liability insurance?
An LLC member or manager should consider limited liability insurance to protect their personal property.
In addition, any company in a risky industry such as construction should consider limited liability. An elevated risk profile can increase the odds that someone might sue and expose a business partner to legal jeopardy.
If a small business doesn’t properly preserve its corporate status (by failing to file reports, hold meetings, etc.), a plaintiff might be able to attack your personal assets.
Limited liability insurance can be backup coverage in case a small business’ general liability or other insurance policies don’t fully cover a claim, or in case the usual firewalls between business and personal assets break down.
What is General Liability insurance?
General liability insurance is small business insurance that protects small business owners against third-party bodily injury, property damage and non-physical injuries such as reputational harm and advertising injury.
It’s often the first insurance policy small business owners buy because it shields them against many common, everyday business risks.
What does General Liability insurance cover?
General liability insurance can help protect your business from:
- Slip-and-fall injuries. A non-employee trips at your business, breaks their leg and files a lawsuit.
- Property damage. You accidentally damage a client or customer’s property.
- Legal fees and defense costs. You need an attorney to defend your business in a lawsuit after a claim.
- Medical payments. Someone (excluding employees) gets injured and asks you to pay for medical expenses.
- Reputational harm. An employee bad-mouths a client online and the client sues you.
- Advertising injury. You’re sued for improper image use in your advertising.
If any of these incidents occur, a general liability insurance policy can help pay for an attorney, legal defense and financial settlements or judgments.
How much does General Liability insurance cost?
General liability insurance costs start at $11 per month or $128 annually. Your actual premium will depend on factors like your business location and operational risks.**
At NEXT, half of our customers pay $25 to $45 per month for their general liability insurance.**
Calculate the premium for a business like yours in your location.
Who needs General Liability insurance?
Any small business can benefit from general liability insurance — especially those who are open to the public or whose operations are more risky. Even home-based businesses with few physical risks (think programmer or copywriter) might need general liability insurance if they’re active on social media or publish internet content.
Do I need both Limited Liability and General Liability insurance?
You and/or your business might want to carry both coverages if you:
- Run a business with a higher risk of physical injury (such as construction).
- Operate a business that engages with the public in a high-traffic area (such as a restaurant or retail shop).
In these scenarios, both types of liability insurance can help protect your business and your personal property.
How NEXT helps small business owners
NEXT creates customized, affordable insurance packages for small business owners.
In addition to general liability insurance, we also offer:
Buy online, manage your policy via web or app 24/7, and get immediate access to your certificate of Insurance.
Get a free instant quote with NEXT.
