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Why an LLC isn’t enough
An LLC or corporation separates your personal assets from the business’s debts in many situations. But a lawsuit can still take everything the business owns, and owners can sometimes be held personally liable, for example for their own negligence. The SBA notes that business structures have limits and insurance fills the gaps.
Your startup insurance plan
| Stage | Policies to consider |
|---|---|
| Before launch | General liability; professional liability if you sell services or advice; cyber if you collect customer data |
| Signing a lease or buying equipment | Commercial property or a BOP; check lease insurance requirements |
| First employee | Workers’ compensation (required in almost every state); state disability insurance in CA, HI, NJ, NY and RI |
| Using vehicles for work | Commercial auto, or hired and non-owned auto cover |
| Raising investment or adding a board | Directors and officers (D&O) insurance |
| Growing headcount | Employment practices liability; commercial umbrella |
What it costs a new business
Most of Insureon’s customers are early-stage: 69% have been in business five years or less, 57% have one employee and 53% earn under $100,000 a year. Their median premiums were:
| Policy | Median monthly cost | About per year |
|---|---|---|
| General liability | $45 | $538 |
| Workers’ compensation | $54 | $648 |
| Business owner’s policy (BOP) | $83 | $990 |
| Professional liability (E&O) | $88 | $1,056 |
| Cyber insurance | $129 | $1,548 |
| Commercial auto | $245 | $2,940 |
Source: Insureon, median premiums paid by its small business customers (February 2026). Most of these customers had one to four employees and revenue under $100,000.
A solo consultant might start with general and professional liability for around $130 a month; a retail startup with a BOP and workers’ comp might pay around $140 a month before other policies.
Ways to keep costs down
- Buy what your risks and contracts require, not every policy at once.
- Bundle in a BOP where you qualify.
- Choose sensible limits; $1 million per occurrence is common for general liability.
- Pay annually if cash flow allows.
- Get several quotes, including online insurers that specialize in small businesses; see our insurer comparison.
- Review at renewal as revenue, staff and services change.
Common startup mistakes
- Relying on a homeowners policy for a home-based startup; see our self-employed guide
- Hiring a first employee before arranging workers’ comp
- Letting a claims-made professional liability policy lapse
- Signing client contracts without checking insurance clauses
- Using a personal car for deliveries without telling the insurer
Frequently asked questions
What insurance does a new LLC need?
Usually general liability first, plus professional liability for service businesses, property cover or a BOP if you have premises or equipment, and workers’ comp once you hire.
Is business insurance required for an LLC?
Not by default, but workers’ comp is required once you have employees in most states, and clients, landlords and lenders often require liability insurance.
How much does startup business insurance cost?
Median premiums start around $45 a month for general liability and $83 for a BOP, according to Insureon’s 2026 data.
When should a startup buy insurance?
Before you start trading, sign a lease or contract, or hire employees.
Does an LLC protect my personal assets?
In many cases, yes, but not always, and it doesn’t protect the business’s own assets. Insurance covers that gap.
Sources
- U.S. Small Business Administration – Get business insurance
- Insureon – Small business insurance costs (Feb 2026)
- Patriot Software – State disability insurance (Aug 2026)
- Pie Insurance – Workers’ comp in Texas
- Maine Bureau of Insurance – Insuring your home business
- NEXT Insurance – AM Best Superior rating (Sept 2025)
Insurance prices, discounts and rules change often and vary by state. Figures were checked in October 2026; confirm details with the insurer or your state insurance department.