Business Insurance

Why an LLC doesn't replace business insurance

A limited liability company, or LLC, can protect your personal property from lawsuits, but that protection has limits. It isn't an insurance policy that pays business losses. Start by insuring against costs you couldn't handle yourself. Our guide to how business insurance works explains the basics.

General liability, property insurance and BOPs

These coverages address different losses:

• General liability helps pay for injuries to other people, damage to their property, libel, slander and legal defense. It excludes employee injuries, which fall under workers' compensation.
• Commercial property covers business buildings and belongings, including inventory, furnishings, computers and machinery. Replacement cost coverage costs more because it pays to replace property without subtracting for depreciation, meaning lost value.
• A business owner's policy, or BOP, bundles several coverages into one policy, including business income coverage. Business income insurance replaces income lost after a covered disaster. A BOP can cost less than separate policies.

BOP eligibility depends on your business type, premises, liability limits and offsite work. Some businesses need customized coverage instead. BOPs typically exclude commercial auto, workers' compensation and professional liability.

When is workers' compensation required?

Workers' compensation provides medical benefits and lost wages for employees injured on the job. Nearly all states require employers to carry it, but state rules differ.

• Texas guidance updated in 2026 says most private employers can choose whether to carry coverage.
• Florida law, per its May 2025 guide, requires coverage at four or more employees outside construction and at least one employee in construction.
• California law, per July 2025 state guidance, requires coverage even with one employee. Roofers must carry it even without employees.

Check your state's current requirements and exemptions before hiring.

Auto, professional liability and cyber coverage

Your personal auto policy may not cover business driving. Commercial auto insurance typically offers higher liability limits and may cover rented vehicles or employees' cars used for work.

Professional liability, also called errors and omissions insurance, addresses claims that your advice or services caused harm through mistakes or negligence.

Most commercial property and general liability policies don't cover cyber risks. Cyber coverage is customized, so review the actual protections rather than assuming your existing policies handle them.

Which coverage fits your business?

Match coverage to what you do:

• Product sellers should consider product liability for injuries caused by defective products.
• Service businesses should review professional liability; shops and studios with substantial assets should review property coverage.
• Tradespeople using trucks should check commercial auto and coverage for business equipment.
• Employers should review workers' compensation and employment practices liability, which addresses claims involving employees' legal rights.
• Home-based owners shouldn't assume homeowners or renters insurance covers business property or liability. Those policies often exclude business use.

What affects cost, and how do you buy?

BOP and liability premiums depend on your business type and risk, premises size, location, building construction and liability limits. Workers' compensation pricing can also reflect payroll, job classifications and, for an established business, safety history. Our business insurance cost guide explains those drivers.

Check your state's rules and your lender's or lease's insurance requirements. Then work with a licensed agent to match policies to losses you couldn't afford. Compare rates, terms and benefits from several different agents.

Once you've identified your risks and requirements, you can compare small business insurance quotes with a clearer coverage checklist.