LLC Insurance Costs: What You’ll Pay―And What You’ll Get

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LLC insurance costs vary widely. Smaller businesses with limited coverage needs can spend as little as $300 or so per year on LLC insurance, while larger businesses with complex insurance needs can spend thousands annually.

In this guide, we’ll help you understand your LLC insurance options, give you an idea of how much your insurance policy will cost, and point you in the right direction for getting more specific numbers.

What is LLC insurance coverage?

LLC insurance coverage can refer to any insurance policy an LLC owner buys for their business.

For example, many LLC business owners get liability coverage that protects their business against claims of bodily injury, property damage, or slander.

But you can get all kinds of insurance coverage for your LLC. The most common types include these policies:

Depending on your business needs, though, you can also get property insurance, auto insurance, unemployment insurance, cyber liability insurance, and more.

Why does my LLC need insurance?

You may worry that LLC insurance will just add another cost to your business budget. But most LLCs need some kind of business insurance. Why?

Pros and cons of LLC insurance

Pros
pro Keeps you legally compliant
pro Protects you from expensive claims
pro Makes your business respectable and legitimate
Cons
con Costs money each month
con Can seem complicated to understand

For starters: the law. Some states require business in certain industries to carry liability insurance. Many states also require you to have workers’ compensation insurance if you employ anyone. Likewise, some states have requirements for unemployment insurance and other coverage.

LLC insurance can also save you money in the long run. It can protect you from expensive lawsuits, medical bills, repair bills, and more. So while we hope you don’t ever really need that insurance policy to kick in, the right coverage can easily pay for itself.

Plus, insurance makes your business reputable. Some business loan providers will want to see that you have insurance coverage in place. Customers may look specifically for well-insured companies (like movers). And venues may require you to hold an insurance policy (if you’re, say, a DJ or photographer).

Simply put, you have plenty of good reasons to get LLC insurance.

How much does LLC insurance cost?

It’s hard to say exactly how much your LLC insurance coverage will cost because your specific insurance costs depend on many different factors, like these:

  • Industry you work in
  • Number of employees
  • History of claims and incidents
  • Coverage options
  • Deductible amount

For example, a doctor employing several other people will probably pay more for general liability insurance than a solo photographer.

Average LLC insurance costs

While we can’t tell you exactly how much to budget for LLC insurance, we can give you a rough idea of what to expect.

The table below shows some typical ranges for different LLC insurance policies.

How much do LLC insurance policies cost?

Insurance type
Average annual cost
Learn more
BOP$400–$1,2001
Commercial auto$600–$12,5002
General liability$350–$6003
Professional liability$300–$1,2004
Workers’ comp$8405

As you can see, the average ranges can be pretty big. That’s because, as we said, so many factors go into your business insurance cost. So if you want to know how much LLC insurance will cost your specific small business, your best bet is to get a quote.

LLC insurance cost components

Keep in mind as you compare LLC insurance costs that your overall cost will depend on a few different factors:

  • Premium: How much you pay each month (or each year) for your insurance policy
  • Deductible: How much money you have to pay before your insurance coverage kicks in
  • Coverage amount: The maximum amount your policy will pay for (per occurrence and in total)

In other words, picking an insurance policy with the lowest monthly premium may not be your best option.  Sure, it will save you money in the short run―but if you end up paying a very high deductible, you may lose those savings quickly.

So instead of focusing entirely on premium costs as you shop around, try to find a good balance of premium, deductible, and coverage.

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LLC insurance coverage options

As we told you, your insurance cost will largely depend on what kind of policy―or policies―your business needs.

So let’s take a look at some common LLC insurance policies and see which ones fit your business. 

Most popular LLC insurance policies

Your business industry, size, and other factors will determine what kinds of insurance you need. But there’s a good chance you’ll want one of more of these popular kinds of business insurance:

LLC insurance types

Coverage
Legally required?
Protects against
Learn more
BOPNoGeneral liability and property damage
General liabilityNo (but may be needed for licensing)Claims of bodily injury, personal injury (like slander), and property damage
Professional liabilityIn some industriesBreach of contract, errors, negligence, and more
Workers’ compIn most statesWorkplace injury claims and pays for healthcare costs for injured workers

When in doubt, check out your local laws. You might find that you need workers’ compensation or professional liability to stay in the clear.

But remember, you can get plenty of value out of policies that aren’t legally required. While you might not be required to get general liability insurance in your state, it can protect your business from all kinds of claims, which saves you money in the long run.

Other types of LLC insurance

In addition to the common types of insurance above, you may also want to get one of these other kinds of LLC insurance.

More LLC insurance types

Coverage
Legally required?
Protects against
Learn more
Business income (Business interruption)NoIncome, rent, payroll, and taxes affected by disaster or other interruptions
Commercial auto/Commercial fleetIn most states (if you have a business vehicle)Medical bills and damages from collisions or other incidents
Commercial propertyNoDamage to physical property
Data breach (cyber liability)NoNotification, investigation, and loss of income due to data breach
Key personNoLost income, replacement costs, and other costs due to a vital employee’s inability to work
Umbrella liabilityNoClaims over the limit of a specified policy

How to get LLC insurance coverage

Ready to find the best insurance policies for your business? Here’s how you do it:

  1. Decide what type of insurance you need.
  2. Find an insurance provider that offers the policies you need.
  3. Give the provider some information about your business.
  4. Get a quote for your insurance needs.
  5. Shop around with other providers or go ahead with your first provider.
  6. Enjoy your newly insured LLC.

Not sure where to start your search? We recommend The Hartford for most business insurance needs. It offers many different types of insurance, can get you coverage in just a day or two, and has more than 200 years of insurance experience.

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The takeaway

LLC insurance costs and needs vary widely based on your industry, location, size, and other considerations.

Some businesses can get by with just a simple liability policy that costs a few hundred dollars per year. Other businesses may need many policies and can end up spending thousands on insurance premiums.

Either way, LLC insurance can pay for itself when it protects you from claims and damages. So make sure you always meet any legal insurance requirements, and consider taking out additional policies that meet your business’s needs.

See how LLC insurance costs fit into your business’s budget with the best small-business accounting software.

Related reading

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Sources

  1. Insureon, “How Much Does a Business Owner’s Policy Cost?” Accessed September 20, 2022.
  2. Car and Drive, “Commercial Auto Insurance Cost: Everything You Need to Know.” April 26, 2021. Accessed September 20, 2022.
  3. Hiscox, “General Liability Insurance Cost.” Accessed September 20, 2022.
  4. Next, “How Much Does Professional Liability Insurance Cost?” Accessed September 20, 2022.
  5. The Hartford, “How Much Does Workers’ Comp Insurance Cost?” Accessed September 20, 2022.
Chloe Goodshore
Written by
Chloe Goodshore
Chloe covers business financing and loans for Business.org. She has worked with many small businesses over the past 10 years, from video game stores to law firms. Those years watching frustrated business owners try to sift through their many options gave her a passion for breaking down complex business topics. She wants to help business owners spend less time agonizing over their businesses so they can spend more time running them.
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