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Liability Insurance FAQ
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Limited Liability Insurance

Anyone who owns a business knows that having various insurance policies simply goes with the territory. Purchasing a limited liability insurance policy is a good idea because it covers the specific portion of a company that a particular owner or partner controls. This puts a necessary cap on their exposure, should the business ever be sued. The limited nature of this policy keeps premiums down and also confines the individual’s financial responsibility in the event of a lawsuit.

A business may be sued for a variety of reasons, among them: personal injuries, failure to fully comply with the terms of a contract, outstanding unpaid debts, or any number of other possible issues. A lawsuit resulting from any of these problems can adversely affect both the personal and business finances of each of the company’s partners. With such insurance, however, each involved party enjoys a degree of financial protection that can safeguard their family’s stability in uncertain circumstances.

Limited Liability Insurance - Attributes

Limited liability insurance protects the company and its owners against the vagaries of the modern business climate. It actually enables higher productivity because, although employees must still work with care in an effort to be error-free, they also understand that they are protected in the event of a mistake. With such coverage, no single error will likely be powerful enough to utterly destroy the business.

Most businesses which purchase this type of insurance are owned by two or more partners. These partners each own a certain share of the company and their insurance coverage should reflect the percentage of the business which each owns. In most cases, the partners can find an insurance company willing to insure them as a group, which keeps premium costs down and simplifies recordkeeping and paperwork.

Limited Liability Insurance - Benefits

The business world is a very uncertain place, but limited liability insurance helps people to protect their portion of it. This insurance makes it easier for investors to take risks because they know their investment is covered. Essentially, it enables both new and experienced business people to get a new operation off the ground with minimal personal risk.

This insurance limits the individual’s financial responsibility to a reasonable level. It can help partners pay for legal defense fees and also help pay a plaintiff in the event of a judgment. Most of all, it provides a necessary layer of peace of mind that can be difficult to acquire in today’s business environment.