LLC Certificate of Insurance

December 31, 2023
llc certificate of insurance

An LLC is a type of business structure that individuals establish in order to protect themselves from being held personally responsible for company liabilities. Essentially, they are treated by the IRS like a corporation, but they can operate like a partnership or sole proprietorship.

Establishing an LLC comes with many benefits but is ultimately a protective measure taken by those who don’t wish to be personally pursued for payment for liabilities brought on by their business. However, no matter how they’re established, small businesses like LLCs will generally need to acquire small business insurance to truly protect their company. 

In this blog, as part of our Certificates of Insurance 101 blog series, we’ll discuss what LLCs are and what they have to do with certificates of insurance (COIs).

What Are the Benefits of an LLC?

Before we get into the insurance side of things, let’s cover some basic definitions. As we explained, a limited liability corporation, also known as an LLC, is a type of business that is treated tax-wise like a sole proprietorship or private partnership but has the limited liability of a corporation. Those who register their business as an LLC do so for a few key reasons. Here are a few of the big benefits of an LLC:

  • LLCs allow owners to protect their personal assets in legal disputes.
  • LLCs can choose to be taxed as either a sole proprietorship or a corporation.
  • LLCs have fewer requirements for maintenance than corporations.
  • It’s simple and inexpensive to form an LLC.

What Is the Meaning of LLC Insurance?

LLC insurance refers to any of the various kinds of insurance coverage that a limited liability corporation may purchase to protect itself and its owners from potential liabilities. This coverage can also be referred to as LLC small business insurance. A few of the commonly purchased kinds of LLC insurance include:

  • General liability insurance
  • Professional liability insurance (also known as errors and omissions insurance)
  • Property insurance
  • Workers’ compensation insurance
  • Commercial auto insurance
  • Cyber liability insurance 
  • Directors and officers (or D&O) insurance

What Is the Purpose of LLC Insurance?

Insurance protects individuals and businesses in the case of covered claims. LLC insurance specifically protects those in a limited liability corporation, especially so that they aren’t personally held legally or financially responsible for liabilities, but rather, their LLC’s insurance provider is.

Let’s walk through an LLC certificate of insurance example. Say that your business wants to work with a new vendor, a small business that has just filed as an LLC that supplies computer chips that you need to create your product. You would want to ensure that the LLC is insured for the creation and delivery of those chips; therefore, you’d request to see proof of their LLC insurance in the form of a COI. 

What Is the Difference Between LLC and Liability Insurance?

When most people mention liability insurance, they’re talking about general liability insurance, which is a kind of coverage that protects against third-party claims related to bodily injury and property damage. LLCs can and typically should purchase liability insurance, which might then be referred to later as LLC liability insurance but is still just a normal general liability policy.

How To Get an LLC Certificate of Insurance

An LLC certificate of insurance can be acquired in the same way as any other COI—through a policyholder’s insurance provider. If you have an LLC and are attempting to provide proof of your business’s insurance coverage to another party, you’ll go to your own insurance provider with that party’s requirements and work with them to generate the document. If you’re a business opting to work with an LLC, and you’re in need of verification of their coverage, you’ll send them a COI request outlining your requirements and wait for them to work with their insurer to issue it for you.

How To Get a LLC Certificate of Insurance Online

Some people wonder how to get an LLC insurance certificate online. Many insurance providers offer digital platforms or portals where customers can do things like schedule appointments, view their policy documents, and request COIs. Not every insurer offers this capability, however, and we advise you to contact your insurance provider for more specific information.

Alternatively, if you are the requesting (hiring) party of an LLC certificate of insurance, you can submit your COI request to the LLC online through a digital communications platform such as email. You can receive the online PDF of the COI there as well and choose to store the file digitally to keep in your records if you so choose.

myCOI: Your One-Stop Shop for COI Management 

We are a premier COI management software platform backed by a team of industry experts—and we take the scary, error-prone parts out of dealing with COIs. Book time with us today to learn how we can help your LLC or small business partners thrive. 

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