Can an LLC Buy Insurance In Its Own Name?

Businesses can be held liable for legal issues, including workplace accidents and alleged professional errors. This extends to business owners once they’re found to be involved in these matters.

Since an LLC separates you and your assets from the entity’s liabilities, it’s considered a great option for launching businesses. But with limited liability protection, you may want to get business liability insurance to decrease potential risks.

If you’re considering buying insurance for your LLC, you may wonder whether it can be done under the company’s name. Read on for the answer and everything else that you need to know.

Key Takeaways

• LLC insurance coverage can be bought under an LLC’s name. Many insurance companies allow LLCs to designate themselves as the “named insured” of their chosen policy.
• When you buy business insurance for an LLC, you reduce its risk of incurring legal liabilities.
• Business insurance options for LLCs include:
  • General liability insurance
  • Commercial property insurance
  • Professional liability insurance
  • Workers’ compensation
  • Data breach or cyber insurance
• Insurers offer business insurance policies at different prices. The actual cost varies depending on factors such as an LLC’s industry and revenue.
• Trusted insurance agents who fully understand LLCs will help you get maximum coverage and explain how your chosen policy works.

Can an LLC Purchase Insurance Under Its Name?

Yes, an LLC can purchase insurance under its name. Many insurance companies offer policies that LLCs can own, with these entities identified as the “named insured.”

Now, what does “named insured” mean? It’s a term describing the owner of an insurance policy, whether it’s an individual or a business. The named insured is covered and protected by their chosen policy, plus they hold specific responsibilities. This person or business:

• Selects their policy and the amount of coverage
• Is notified of premium payments and cancellations
• Pays the premium for their chosen policy

With your LLC as the named insured of its chosen policy, it owes defense and indemnification to the insurer. Hence, you should provide the LLC’s correct name to prevent issues.

Why Buy Insurance Under an LLC’s Name?

Again, an LLC offers limited liability protection. Purchasing business liability insurance under the entity’s name reduces your LLC’s exposure to possible risks. As a result, you and your assets stay separate from the entity.

Business insurance options for LLCs offer several key advantages over personal policies. At most, they specifically cover business activities while legitimizing an LLC’s operations. Moreover, LLCs are recognized as legal entities that own assets, owe debts, and mitigate risks. This allows your business to establish its insurance history and helps it get better rates.

Related Resource

Learn how to keep your LLC’s corporate veil intact from NCH.

Which Types of Insurance Policies are Ideal for LLCs?

Multiple types of insurance policies are available to LLCs, including:

General Liability Insurance

General liability insurance protects your business against claims of bodily injury, property damage, and personal injury that may occur during normal business operations.

For example, if a customer slips and falls at your business location, general liability insurance would cover medical expenses and legal costs.

Commercial Property Insurance

Commercial property insurance protects the physical assets that your LLC owns or leases, including buildings and equipment. However, its coverage excludes damage caused by earthquakes or floods. A separate policy would offer protection for these types of damage to your LLC’s property.

Professional Liability Insurance

Professional liability insurance or errors and omissions (E&O) insurance protects service providers against claims of negligence, mistakes, or failure to deliver promised services. This type of business insurance is ideal for:

• Consulting firms
• Technology companies
• Healthcare providers
• Other service providers operating as professional LLCs

E&O insurance typically covers legal defense costs, settlements, and judgments related to professional mistakes or alleged failures to perform contracted services. With professional liability claims potentially reaching hundreds of thousands or even millions of dollars, this coverage will help you protect your LLC.

Workers’ Compensation Insurance

If your LLC has employees, it must have workers’ compensation insurance. This policy covers injured or sick employees, helping them settle medical bills or recover lost wages.

Additionally, workers’ compensation insurance can be used to pay for a deceased employee’s funeral or cover ongoing treatment.

Purchasing this type of insurance policy is typically required by state law. Otherwise, your LLC may be penalized or sued.

Data Breach Insurance

Many businesses operate online, exposing themselves to digital threats. LLC insurance coverage can protect your business from risks such as data breaches.

If your LLC owns a data breach insurance (or cyber insurance) policy, it can address a data breach quickly. The policy can cover the costs of informing affected customers, tracking identity theft, and creating a public relations campaign. Plus, data breach insurance may cover losses from operational disruptions due to cyber attacks.

As of 2025, the average cost of data breaches stands at $4.4 million. This makes a cyber insurance policy a smart investment for your LLC.

Related Resource

Learn the basics of LLCs and insurance policies (and what’s the best option for you) from NCH’s Wealthy & Wise series.

How Much Does Business Insurance Cost?

The cost of business insurance options for LLCs varies depending on several factors.

• The LLC’s industry or business activities – Higher-risk businesses tend to pay higher premiums. However, they’re very exposed to potential losses.
• The number of employees – Managing more workers increases the cost of your LLC’s chosen insurance policy.
• The LLC’s claim history – An LLC with no claims is considered safe and handles potential risks well. Ultimately, it spends less on its insurance policy.
• Policy details – You can buy an insurance policy with a higher coverage limit or a lower deductible. Any of these details may increase your LLC’s insurance premium.
• The LLC’s revenue – The more revenue your LLC generates, the costlier its insurance policy will be.

How to Set an Appropriate Insurance Coverage Limit

To set an appropriate insurance coverage limit, you must compare premium costs to potential exposure.

Your LLC should carry enough insurance to protect business assets without paying for excess coverage. Thus, determining the total value of your company’s assets, its potential exposure to liabilities, and identifying industry-specific risks is important. You can buy commercial umbrella insurance to increase your current policy’s coverage limits if they exceed their standard amounts.

How to Get the Best Business Insurance Policy for Your LLC

If you’re buying business insurance for your LLC, here’s how to get the best policy.

1. Evaluate potential risks to the business. Identify the type of accidents, calamities, or lawsuits that your LLC can be exposed to.
2. Choose a trusted insurance agent. Use their expertise to choose the best business insurance policy for your LLC.
3. Compare available policies. Business insurance rates, terms, and benefits vary by insurer.
4. Determine whether your chosen policy still meets your LLC’s needs. After all, your venture’s liabilities increase with its growth.

How to Choose a Reputable Insurer

When a business insurance provider fully understands an LLC’s overall structure and insurance needs, they’ll ensure full coverage and fewer costs. Choose agents or brokers who work with LLCs and can explain how different types of business insurance help you protect business assets.

Also, consider working with insurance agents specializing in your LLC’s industry. Since these experts understand industry-specific risks, they can recommend the best policy for your LLC. If you operate in Nevada, your chosen insurer should know how state law protects your business from liability.

What Documents Do I Need for Insurance Policies?

Depending on your insurance provider, you may need the following documents for applications and claims.

• Your LLC’s Articles of Organization
• The Operating Agreement
• Copies of your business licenses and permits (if applicable)
• Financial statements

Once your insurance application or claim is approved, a registered agent should receive notices about it and forward them to your LLC. This individual or service keeps communication between the business, its chosen insurer, and regulatory agencies open.

Related Resource

Learn what a Nevada registered agent does for a Nevada LLC.

Frequently Asked Questions

Can my LLC buy insurance even if it’s a single-member LLC?

Yes, your LLC can buy insurance even if it’s a single-member LLC.

An LLC is considered legally separate from you and your assets, regardless of how many members it has. Still, consider asking your insurer if it offers business insurance policies for single-member LLCs. Some insurance providers may issue them.

Do I need an EIN to purchase business insurance for my LLC?

Yes, you need an EIN to purchase business insurance for your LLC. Many insurers require this tax identification number from companies that apply for business insurance policies.

If your LLC buys workers’ compensation insurance, it’ll need to give its EIN to its chosen insurer. The number is also required for general liability insurance policies.

Can I use personal insurance to cover my LLC’s activities?

Most personal insurance policies don’t cover business activities. Hence, you can’t use them to cover your LLC’s operations.

Business insurance policies protect your LLC from claims related to injury, property damage, and legal liabilities. Also, they can help keep personal and business assets separate from each other.

Does my LLC need multiple types of insurance policies?

Your LLC may need multiple types of insurance policies, depending on its industry and level of risk.

For professional LLCs, they may need general liability and E&O insurance. Conversely, sellers of tangible goods may own product liability insurance. And if your LLC has employees, it may be required to have workers’ compensation insurance.

How much does business insurance for LLCs cost?

The cost of business insurance for LLCs varies depending on factors such as industry, policy details, and business revenue. Your chosen insurer should help you choose the best policy for your LLC with these factors in mind.

Does business insurance protect personal assets?

While business insurance protects your LLCs from certain claims, it doesn’t protect personal assets. Personal asset protection works by maintaining your LLC’s structure. 

With a business insurance policy, you reduce the potential costs of legal claims. Meanwhile, an LLC shields you and your assets from its liabilities.

What happens to my LLC’s insurance policy if I change its legal name?

If you change your LLC’s legal name, you must inform your insurer of it. The information on your LLC’s insurance policy needs to be updated with its new name. Once this is done, the business will remain covered by its insurance policy.

Does my LLC need cyber liability insurance?

Yes, your LLC needs cyber liability insurance. That’s because it can be exposed to data breaches and similar threats. If your LLC handles any customer data, accepts credit card payments, or uses digital systems, cyber liability insurance protects it from cyber attacks.

Can my LLC be denied business insurance coverage?

Yes, your LLC can be denied business insurance coverage. Insurers may do this if your business:

• Operates with a high risk of legal liability
• Has a poor claim history
• Takes fewer measures to reduce potential risks

Most LLCs can obtain insurance coverage, although it may cost more for high-risk entities.

Should my LLC carry insurance even if it isn’t operational?

Yes, your LLC should carry insurance even if it isn’t operational.

LLCs with minimal business activities can be held liable for client disputes, accidents, or data breaches. A single claim can cause financial losses without insurance coverage.

With a business insurance policy, your LLC reduces potential risks and preserve its liability protection.

Expert Tips From NCH

1. Provide insurers with the necessary documents for insurance policy applications. Your insurance agent or provider may require you to submit copies of documents such as your Articles of Organization and operating agreement.
2. Maintain detailed records of all business insurance policies, including coverage limits, deductibles, and renewal dates. You’ll need them when filing claims or comparing the coverage limits of different policies.
3. Use your LLC’s exact legal name when purchasing business insurance policies. The name on the policy must match the name on your LLC’s formation documents for proper coverage.
4. Assess your LLC’s insurance coverage as the business grows. It changes whenever your LLC expands its operations, adds employees, or acquires new assets.
5. Implement safety and risk management programs to reduce premiums. Your chosen insurer may offer your LLC a lower insurance premium if it has well-documented safety and risk management procedures.

Protect Your LLC with Business Insurance

Your LLC can buy business insurance under its name. However, the company should use the name listed on its public filings for its chosen policy. This ensures accuracy and continuous coverage.

Forming an LLC helps you secure business financing, and it can be combined with business insurance for proper protection. If you want reduced legal liability while operating your LLC, NCH can help you achieve it with effective strategies.

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DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.