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

At a glance

Requirements one by one

Indemnification and covered people

Section 13.1-1009(16) gives the company power, subject to standards and restrictions in its articles or operating agreement, “to indemnify and hold harmless any member or manager or other person” against claims and demands. The section grants a power; it does not itself say that every claim must be paid. It does not add an express former-office or former-membership condition.

Expense payments before disposition

The same clause allows the company to “pay for or reimburse” a member, manager, or other person for reasonable expenses incurred as a party to a proceeding in advance of its final disposition. It states no separate repayment undertaking, security requirement, or special approval vote. The wording ties this express expense-payment power to a proceeding; it does not state a separate mandatory formula for an ordinary company bill someone paid.

Insurance and agreement terms

Va. Code § 13.1-1009(13) expressly permits life insurance for the company's benefit on managers, members, and employees, including member-interest acquisition coverage and its continuation after the relationship ends. The section's general powers also include making contracts under § 13.1-1009(5). It does not separately prescribe liability-policy coverage for a person's claim or say that a policy may insure conduct the LLC cannot indemnify. Section 13.1-1023(A)(1) permits agreement provisions on the LLC's affairs and business when consistent with Virginia law and its articles.

What trips people up

The advance in § 13.1-1009(16) concerns reasonable expenses of someone who is a party to a proceeding before final disposition. A reimbursement request for a vendor bill paid on the company's behalf is a different question and needs its own agreement or other basis. Likewise, the express insurance item in subsection (13) is about life coverage, so the statute's broad contract power and the actual policy must be reviewed for another kind of insurance.

Common questions

Must the LLC pay every defense bill as it arrives? No automatic duty appears in § 13.1-1009(16); it grants the company power to pay or reimburse qualifying reasonable proceeding expenses before final disposition, subject to its governing documents.

Does the statute require a repayment promise before an advance? Section 13.1-1009(16) states no such prerequisite. Check the articles, operating agreement, and the proposed payment terms.

Does leaving the company automatically end protection? The clause names members, managers, and other persons without a separate former-status rule. Eligibility depends on the applicable company documents and the facts of the claim.

Statutes and sources

• Va. Code § 13.1-1009, including subsections (5), (13), and (16): LLC powers to contract, buy specified life insurance, indemnify, and pay or reimburse proceeding expenses. Official text, accessed 2026-09-23.
• Va. Code § 13.1-1023(A)(1): operating-agreement authority and the consistency limit. Official text, accessed 2026-09-23.