Is it acceptable to exclude a DBA from professional liability insurance under an LLC?
I’m an interior designer, and my husband runs a remodeling contracting business. We’ve merged our operations under a single LLC, registered in my name (Company A), while his business name (Company B) operates as a DBA under that LLC. We encountered some challenges when trying to obtain professional liability insurance for both businesses, although we were able to secure general liability coverage for both.
Since my husband doesn’t necessarily need professional liability insurance, I can get a policy solely for my work. However, this policy lists “Company A LLC DBA Company B” as an exclusion. The insurance company assured me this is acceptable, but I’m worried about whether my LLC still has coverage since “Company A LLC” is the designated insured party. Can anyone clarify this situation for me? I hope I haven’t made it too confusing!
It’s understandable to feel concerned about how your professional liability insurance applies in your situation. Here are some points to consider:
Understanding the Exclusion: Since your professional liability insurance policy for your interior design work excludes “company A LLC DBA company B,” it generally means that any claims related to the remodeling contractor work (company B) will not be covered under that policy. However, your interior design work should still be adequately covered, as long as you are using the correct coverage that applies to your design services.
LLC Coverage: An LLC typically protects the owners (members) from personal liability for business debts and liabilities. However, having a professional liability insurance policy that excludes part of the business name can cause concerns about whether your entire LLC entity is protected in the event of a lawsuit. The key lies in the terms of the policy and local regulations.
Consult the Insurance Provider: It’s essential to have a direct conversation with your insurance provider to clarify your concerns. Ask them specifically about how this exclusion impacts the LLC as a whole and the liability coverage in place.
Consider Separate Policies: If your husband’s business also needs liability coverage as a remodeling contractor, you may want to consider a separate professional liability policy for him, even if he doesn’t believe he needs one. This can help ensure that both businesses have the respective protection they need.
Professional Advice: It would be wise to consult with a legal or insurance professional who can give tailored advice based on your specific situation. They can help clarify coverage concerns and suggest the best way to proceed based on your unique circumstances.
Maintaining the appropriate insurance coverage is crucial for both your businesses, so it’s great that you’re seeking clarity on this matter!