Does My LLC Need Insurance in Connecticut? What the Law Requires and What the LLC Does Not Protect

Short answer: Connecticut does not require an LLC to carry general business insurance just because it is an LLC. But workers' compensation is required once the business has one or more employees, business-owned vehicles must carry auto liability, and leases, clients and towns routinely require general liability. The LLC can help protect your personal assets from business debts; it does nothing to protect the business's own bank account, equipment and revenue from a lawsuit. Insurance does that.

What the LLC does and does not do

A limited liability company separates the business's obligations from yours, so a creditor of the business generally cannot reach your house. But a judgment against the LLC can take everything the LLC owns. And the shield has limits: you remain personally liable for your own negligent acts, for personal guarantees on leases and loans, and courts can disregard the LLC if it is undercapitalized or its finances are mixed with yours.

What Connecticut requires

• Workers' compensation for employers with one or more employees, full- or part-time. Rules for whether LLC members themselves are covered differ from rules for employees; see Connecticut workers' comp requirements.
• Auto liability for any vehicle registered to the business, at least Connecticut's minimum limits, though contracts often require $1 million. See commercial auto in Connecticut.
• Licensing-related requirements for certain occupations and permits, such as liquor permit holders, some trades, and businesses bidding municipal work.

What contracts usually require

• Commercial leases: general liability (often $1 million per occurrence), property coverage on your improvements, and the landlord as additional insured
• Clients and general contractors: general liability, workers' comp, auto, often an umbrella, and certificates naming them as additional insured
• Lenders: property coverage with the lender as loss payee
• Professional services clients: professional liability

What most Connecticut LLCs should carry

• General liability or a business owners policy
• Professional liability if you give advice or design, consult, or provide a professional service
• Cyber liability if you hold customer data; Connecticut's breach-notification law applies regardless of size
• Employment practices liability once you have employees; see EPLI in Connecticut
• Commercial umbrella once contracts or exposures exceed $1 million

Single-member LLCs and rental properties

Many Connecticut landlords hold rental property in an LLC. The property insurance must name the LLC as the insured, not just you personally, or claims can be complicated. See insuring property owned by a trust or LLC.

New England Insurance, an independent Connecticut agency in Bridgeport since 2012, reviews what your contracts and operations actually require. Request a review.

General information, not legal advice. Talk to a Connecticut attorney about entity structure.