Business Insurance for S Corps

Businesses can be structured in different ways. Many small businesses are set up as limited liability companies (LLCs), but a business owner can also choose to structure their company as an S corp. Also known as a pass-through entity, it allows shareholders of the business to report income and losses when filing their taxes.

While an S corp limits the business owner and shareholders’ liability, the business still faces risks from normal operations. That’s why business insurance for S corps is important. We can help most businesses get the right type of small business insurance to help protect them from various risks.

Do I Need Insurance for an S Corp?

States may require S corps to have certain types of insurance. For example, if you have employees, most states require you to carry workers’ compensation insurance.

Even if it’s not required, getting insurance is a good idea because it helps protect your business from risks that can come up during normal operations. Many business owners start with a Business Owner’s Policy (BOP) for their insurance needs.

A BOP includes three essential types of coverage:

General liability insurance
Commercial property insurance
Business income insurance

Because every small business is unique, you may need to get other types of coverage for more protection.

General Liability Insurance

General liability insurance helps protect S corps from claims that they caused:

Bodily injury
Property damage
Reputational harm, such as libel or slander

Generally, states don’t require this liability coverage, but it can help cover a broad range of claims. It’s one of the minimum insurance coverages that business owners should have.

Workers’ Compensation Insurance

Workers’ compensation insurance helps your employees recover from a work-related injury or illness. Workers’ compensation coverage provides benefits to your employees that can help cover their:

Medical expenses
Ongoing care costs
Lost wages

Be aware that in most states, if employees work at your S corp, workers’ compensation is required. It’s a good idea to know your state’s workers’ compensation laws to make sure your business complies with any requirements.

Professional Liability Insurance

If your S corp provides a professional service to clients or customers, it can get sued for making a mistake or error. That’s where professional liability insurance can help. This coverage can help cover your S corp’s:

Legal costs
Attorney fees
Judgments
Settlements

Commercial Property Insurance

Commercial property insurance can help protect your S corp’s rented or own building, inventory, equipment and tools used to operate.

Commercial Auto Insurance

If your S corp owns vehicles that you or your employee use for business, you may need commercial auto insurance. It can help cover bodily injury and property damage claims due to an accident that your business is involved in.

Be aware that states may require this type of coverage.

Cyber Insurance

If your S corp collects or stores personally identifiable information (PII), it faces a unique risk. Lost or stolen PII can result in fines, fees, penalties or criminal charges. And if there’s a data breach, responding and recovering from the incident can get costly. Data breach insurance, which some insurers call cyber insurance, can help your S corp if PII gets lost or stolen.

Pros and Cons of an S Corp

There are pros and cons of forming a S corp. Some of the pros include:

Protecting personal assets from liabilities
Pass-through taxation, allowing business income tax, losses or deductions to be reported on the owners’ tax returns
Dividends from the corporations can be paid out to owners and shareholders

Some of the disadvantages of a S corp are:

Stricter requirements, such as who qualifies as corporation shareholders, how many shareholders there can be and the type of stock offered
Following local regulations for corporations

Remember, a S corp is only one of many different business structures. Depending on their business, we also offer:

Common Questions About S Corps and Business Insurance

How Much Does S Corp Insurance Cost?

S corp insurance costs vary because every business is different. On average, our customers paid an average of about $67 a month for general liability insurance and about $85 a month for a BOP.¹ The best way to find out your business’ insurance premiums is to get a quote.

Does an S Corp Provide Liability Protection?

A S corp provides liability protection to the owner’s personal assets. S corps are similar to LLCs where personal assets are separate from the business assets. So, if there’s a claim or lawsuit, the owner of a S corp doesn’t have to worry about their personal assets getting targeted.

Get a Quote for Business Insurance for a S Corp

Not all insurance companies are the same. We know every small business and S corp faces unique risks. Our specialists can help you find the right coverage to protect your business. We offer different types of insurance that can help protect most small businesses. Get a quote today.

Last Updated: November 20, 2023

¹ Premium amounts presented are based on monthly premium paid by The Hartford’s Small Business customers between 1/1/22 and 9/14/23 for 12-month policies. Premium is derived from a number of factors specific to your business and may vary.

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