LLC Reimbursement, Indemnification, Advancement, and Insurance Requirements in Maine

Short answer Maine permits an LLC to indemnify a member or other person, pay expenses in advance or reimburse expenses they incur, and purchase insurance on their behalf. The statute states these as permissions rather than mandatory entitlements, and its one-sentence rule does not prescribe a claim type, conduct test, repayment promise, or special approval procedure. The company agreement and the facts still matter.

State

Maine

Statute checked

September 23, 2026

Sources

6 statutes

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At a glance

Governing LLC law and scope	31 M.R.S. § 1557 permits LLC indemnity, advance or reimbursement of expenses, and insurance; §§ 1521–1522 govern agreement control and limits
Covered people and capacities	Member or other person for each § 1557 mechanism; no named manager-only or former-status category in that section
Company-payment reimbursement	May reimburse expenses incurred by member or other person; § 1557 states no mandatory company-payment or ordinary-course test
Indemnification and conduct limits	May indemnify and hold harmless member or other person; § 1557 states no enumerated claim, judgment, conduct or success condition
Expense advancement and repayment	May pay member/other person's incurred expenses in advance; § 1557 states no repayment undertaking or separate timing test
Insurance purchase authority	May purchase and maintain insurance on behalf of member or other person; § 1557 states no special nonindemnifiable-conduct extension
Approval and court procedure	§ 1557 prescribes no special disinterested vote, independent-counsel determination or court application
Agreement control and survival	Agreement governs member/company relations and chapter fills gaps (§ 1521(1)–(2)); implied good-faith covenant and listed § 1522 limits remain; no former-status survival in § 1557
What the statute does not decide	Actual expense, liability, company decision, agreement terms, and policy scope require case-specific review

Requirements one by one

Four permissions in one provision

31 M.R.S. § 1557 says an LLC “may indemnify and hold harmless a member or other person, pay in advance or reimburse expenses incurred by a member or other person and purchase and maintain insurance on behalf of a member or other person.” The same sentence covers indemnity, advance payment, reimbursement and insurance; it does not turn those permissions into an automatic right to payment or coverage. It names a member or other person without a separate manager or former-member category.

Agreement control

Under § 1521(1), the LLC agreement governs relations among members as members and between members and the company; § 1521(2) makes Chapter 21 the gap filler. § 1521(3)(A) allows a written agreement to adjust duties but preserves the implied contractual covenant of good faith and fair dealing. Section 1522(1)(F) bars eliminating or limiting a member's money-damages liability for a bad-faith covenant violation; § 1522(2) confirms the covenant in every LLC agreement.

What trips people up

Section 1557 does not distinguish reimbursement of a payment made for the company from expenses connected to a claim, or supply an ordinary-course condition. It also sets no repayment undertaking for an advance, special indemnity decision maker, or court route. Permission to maintain insurance is not a statement that a particular policy covers a claim.

Common questions

Must the LLC advance legal fees? Section 1557 uses “may” and does not itself require an advance.

Does the statute cover someone who is not a member? Yes. Section 1557 repeatedly says “member or other person”; whether a particular person's expense or claim qualifies still depends on the facts and governing documents.

Statutes and sources

31 M.R.S. § 1521(1)–(3)(A): “the limited liability company agreement governs relations among the members as members and between the members and the limited liability company,” subject to the stated limits. Official current statute, accessed 2026-09-23.
31 M.R.S. § 1522(1)(F), (2): “there exists an implied contractual covenant of good faith and fair dealing in every limited liability company agreement.” Official current statute, accessed 2026-09-23.
31 M.R.S. § 1557: “A limited liability company may indemnify and hold harmless a member or other person, pay in advance or reimburse expenses incurred by a member or other person and purchase and maintain insurance on behalf of a member or other person.” Official current statute, accessed 2026-09-23.

Source links

Every statute quoted above, linked, with the date we checked it.

31 M.R.S. § 1521(1) · accessed 2026-09-23

31 M.R.S. § 1521(2) · accessed 2026-09-23

31 M.R.S. § 1521(3)(A) · accessed 2026-09-23

31 M.R.S. § 1522(1)(F) · accessed 2026-09-23

31 M.R.S. § 1522(2) · accessed 2026-09-23

31 M.R.S. § 1557 · accessed 2026-09-23

This page is general legal information about state LLC reimbursement, indemnification, expense advancement, and insurance statutes, not legal advice or a determination that any person is entitled to payment or coverage. An operating agreement, company records, the person's capacity and conduct, the nature and timing of a claim, and an insurance policy may change the answer. The table does not decide expense reasonableness, insolvency, tax treatment, policy terms, disputed facts, or a litigation outcome. Check the current statute and governing documents and seek licensed advice for a particular matter.

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