Is it acceptable for a DBA under an LLC to be excluded from professional liability insurance?
I’m an interior designer, and my husband runs a remodeling contracting business. We decided to merge our businesses into a single LLC for tax purposes, with my company (let’s call it Company A) and his company (Company B) operating under the same umbrella. However, we’ve encountered some challenges in securing professional liability insurance for both of our businesses. We managed to obtain general liability coverage for both, but professional liability has been trickier.
Since my husband doesn’t require professional liability coverage, I’m pursuing a policy specifically for my business. However, it includes an exclusion stating that “Company A LLC DBA Company B” is not covered. The insurance company assured me that this arrangement is acceptable, but I’m worried about whether my LLC is fully protected since “Company A LLC” is the only name listed as the insured. Could anyone clarify this situation for me? I hope I haven’t made it too complicated!
You’re in a unique situation, and it’s understandable to have concerns about your coverage. Since you’re operating under a single LLC with a DBA, the key aspect is that your LLC (Company A) is the legal entity. When the insurance policy lists your LLC as the named insured, it typically means that the LLC has coverage for claims related to its operations.
In your case, since you have a professional liability policy that specifically excludes “Company B,” it indicates that while you are covered under the policy for your services as an interior designer, any claims that might arise from remodeling work associated with your husband’s contracting business wouldn’t be covered under that policy.
Here are a few points to consider:
Association of the DBA with the LLC: Since “Company B” is simply a DBA for the LLC, any liability related to the activities of the DBA may still be legally tied to “Company A.” However, the specifics of your policy will dictate the coverage.
Consult Your Insurer: It’s wise to go back to your insurance agent and ensure you have clarity on how the exclusion impacts potential claims. Ask for written confirmation regarding any potential liabilities and how they would be handled.
Consider Separate Policies: If your husband’s remodeling work may lead to liability risks that are different from yours as an interior designer, it may be worth exploring a separate professional liability policy for him to cover any risks associated with his work.
Legal Advice: Given the complexities surrounding liability and insurance, consulting with a lawyer who specializes in business or insurance law could provide further peace of mind. They can clarify how your DBA and LLC structure affects liability coverage.
Evaluate Coverage Needs: Lastly, think through the scenarios where you’d need coverage. If there’s a significant overlap in services or clientele, ensuring that both parties are adequately covered is crucial for your business partnership.
In summary, while it sounds like you have some coverage, getting clarity on the implications of the exclusion and considering additional policies may help protect both aspects of your business.