Does an LLC need liability coverage?

An LLC business structure provides you with a certain level of protection from personal liabilities. However, it’s not all-inclusive.

If you accidentally do something illegal or you mix your personal and business expenses, you can’t hide behind an LLC. Instead, you’ll need the right liability coverages to save the day.

As a business owner, deciding when to get commercial liability insurance can be confusing. That’s why we put together this guide to help simplify things. To get business liability insurance in Ontario, you should get in contact with the best firm.

Read on to find out.

What Is Commercial Liability Insurance?

What exactly is commercial liability insurance? It’s a type of coverage that protects your company from property damage, bodily injury, and other claims. If these claims are brought against your company, your liability policy can help protect your assets.

You’ll often hear general commercial liability referred to as business liability insurance. The term general liability can be a little bit confusing. After all, is it the same thing as a commercial liability?

There isn’t a difference between general liability and commercial liability. Both of these terms refer to the same type of coverage. It’s liability coverage that helps protect your business.

What Does Commercial Insurance Cover?

Commercial general liability coverages will kick in if you or one of your employees damage a client’s property. Business liability also helps pay for personal injury, including slander and libel. Any type of advertising injury can also be filed under your liability coverages.

You might not think that you need coverages for slander or accidents, but these things happen a lot more than expected. Accidents and mistakes are bound to happen during normal business hours, and you’ll want to make sure you have the right coverages in place.

If a customer decides to sue you, your coverages are what help pay for your attorney and witness fees. Liability coverages cover medical payments, evidence and document retrieval, settlements, and judgment costs.

Considering how expensive legal costs can be, every bit of financial assistance you can get from the insurance company will help. Even if the customer decides to drop their lawsuit, you’ll still be holding the ball with a ton of legal costs.

Your attorney fees alone can cost quite a bit. That’s why liability insurance is so important.

You’ll need the coverages to help cover claims and lawsuits. Without the right coverages, your assets and company overall are at a major financial risk.

Examples of Covered Claims

Professional liability insurance is going to help cover claims if you make a mistake while providing services to a client. Management liability coverages help protect officers and directors from different liability threats.

Employment practices liability insurance helps cover claims regarding harassment, wrongful termination, and discrimination. Finally, product liability insurance helps companies that sell physical goods.

If you’d like, you can get product liability insurance as a standalone policy. By doing so you can avoid having a complex liability plan.

Alternatively, wholesale distributors and manufacturers will probably need a complex plan. When you talk to an insurance agent you’ll be able to find out more about your company’s exact needs. 

Determining Policy Pricing

Exactly how much can you expect to pay for your general liability insurance policy? The price is going to depend on what your business needs.

Your coverage needs will be different from other industries. That means your commercial liability policy will be different too.

Insurance costs factor in annual revenue, coverage limits, location, and type of business. Let’s say, for instance, that you own and operate a high-risk business.

Landscaping would be considered a high-risk business. In this situation, you can expect to pay more for general liability coverages since the insurance company is taking on a higher risk.

When you’re using landscaping equipment, the chances of property damage or injuries are much higher. That means the provider is going to charge you more to cover your company fully.

The location you operate out of also affects your insurance premiums. If you live in a less populated area, you’re operating risks are probably lower. Oftentimes individuals living in low population areas can enjoy reduced insurance rates.

Does your company bring in a lot of revenue every year? The higher your annual sales or revenue numbers are, the more you’ll pay for coverage.

Why pay more for being profitable? The more profitable your company is, the more coverage you’ll need to have full protection.

Speaking of coverages, when you have high limits, you can expect your rates to increase. However, having high coverage limits means you’ll have peace of mind knowing that your company has all the help it can get.

Who Needs Commercial Insurance?

Who exactly should purchase a commercial general liability policy? These policies work best for all-sized businesses.

Sole proprietors, small business owners, and large corporations can benefit from liability coverage. Independent contractors, IT firms, photo studios, and beauty shops all need liability.

In addition to carrying the standard liability coverages, there are a few add-ons you should consider. We suggest adding professional liability insurance, management liability insurance, and employment practices liability insurance.

You should also invest in a quality workers’ compensation insurance plan and product liability insurance. The more coverage you have, the easier it’ll be to remain in business if the worst should occur.

Quoting Tips and Tricks

When getting quotes for general liability insurance, make sure you have the agents quote exact coverages. The more exact the coverage limits can be, the easier it’ll be to determine your policy premium. It’s also helpful if you call more than one insurance company.

By calling several companies, you’ll be able to easily compare quotes to see who’s offering the best coverages. Keep in mind that price isn’t the only deciding factor. You should also choose your insurance provider based on expertise and reputation.

Always Be Honest

We understand how expensive insurance can be. It might be tempting to skew the details to receive a lower premium. However, not giving insurance agents all of the information they need is never a good idea.

Instead, it’s always in your best interest to be 100% truthful while receiving quotes. If the insurance agent asks about past accidents, let them know exactly what’s occurred.

If the agent needs to know about the different risks involved in your company, don’t try to hide any of the liability risks. By being upfront from the beginning, you’ll be able to get the coverages you need right away.

Determining Providers Reputation

The best providers will have years of experience helping individuals in your industry. You should also easily be able to find online customer reviews.

After reading 5 to 10 customer reviews, you’ll have a good idea of how the insurance company operates. Keep in mind that 1-2 bad reviews aren’t necessarily a bad thing. Instead, look for repeated complaints.

If there are repeated complaints that the insurance provider doesn’t pay out claims or handle customer service issues timely, then take your business elsewhere. Instead, look for a company with a stellar online reputation for providing liability coverages.

Once you receive a quote that you like, you can move forward with starting the policy. Be sure to request a certificate of insurance the moment your policy begins. 

What’s Not Covered With Commercial Insurance?

So far, we’ve been discussing the different things that a commercial insurance policy will cover. But what about the things that won’t cover?

Every provider will offer slightly different terms of coverage. Generally speaking, your commercial liability policy won’t cover professional liabilities.

You also won’t be able to receive coverage for damage to your commercial property. In other words, if an employee damages your office, your liability coverages aren’t going to pay for it.

Instead, liability applies when the claim is coming from a third party. If the claim is coming from yourself, you’d be filing it under standard insurance.

Liability also doesn’t pay for work-related illnesses or injuries. Remember, you’ll need workers’ compensation to help with that.

Did you know employees steal about $50 million in total every year? Unfortunately, employee theft of company property also isn’t covered under your liability policy. However, you can receive employee theft coverages under a standard commercial policy.

Punitive damages, intentional acts, and workmanship also won’t be in your commercial liability policy. The same goes for auto accidents. If one of your employees is involved in a car accident, you’ll need to rely on your commercial auto policy, not your liability coverage.

Have the Coverages You Need

There you have it! Now you know the ins and outs of commercial liability insurance coverages. Not only will you have protection against injury claims, but you’ll also be able to protect your company against libel and slander lawsuits.

Since every industry will need its own unique coverages, reach out to an experienced insurance agent today. Let them know everything about your business, so they can provide you with the best quote possible. Remember to get a few quotes so you can compare prices.

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