I’m starting a small (1-person) consulting biz and have an LLC and business account. I understand that the LLC protects my personal assets, so what is the benefit of getting liability insurance on top of this? What are some of the more popular companies to get this coverage?
There are requirements for an LLC to protect you, and even then, an Llc probably doesn’t do what you think
My mentor always told me, llc separates your business and your personal assets. But someone can still sue you personally. People always think that llc will 100% cover you, and that’s just not true. Llc is more for structural and tax reasons. Liability is necessary in certain businesses, but not all. If you have an etsy buisness, the chances of needing it is pretty low. However, if you own a cleaning business, you want it because you’re in peoples’ homes and a lot can occur.
Some of your customers may require you to carry liability insurance to do business with you. I have a 2 million dollar general liability policy with my largest customer as a named party. I also carry 2 million in professional liability as well. I use NEXT and I think I pay just under $100 a month for all of that.
It’s not very expensive. I have a $2million policy for $350 from Hiscox.
An LLC is likely not sufficient protection for all the ways that you, as an individual, can cause harm to a customer, because you can still be sued and found liable as an individual separate from your business. Liability insurance protects you against some of those ways.
I’ve been consulting for over 23 years.
Operate as sole proprietor with registered fictitious name.
I have never been sued. Reasons are I am really good at what I do plus the disclaimer I place on reports.
“XXXXX, its affiliates, and subsidiaries make no guarantees, representations, or warranties as to the accuracy of specific forecasts, projections, or predictive statements contained herein.
Many factors impact the operation and profitability of a business that cannot be predicted or built into financial models and projections.
The information provided herein is not intended to replace or serve as a substitute for any legal, real estate, tax, or other professional advice, consultation, or service.
You assume any and all risk relying on these projections.”