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Limited liability versus insurance

Limited liability versus insurance

As frequent readers of our blog can attest, we have spoken about choosing the appropriate entity for a business multiple times, including how to avoid personal liability through that business entity selection. But, what about Commercial General Liability insurance?

Limited liability versus insurance

When selecting an appropriate business entity, business owners think about taxes and liability. And, those are two very appropriate lines of thinking when selecting a business entity. Though, when one thinks about liability, they think about whether someone can sue them personally, or if they can limit liability to the business. However, just because one’s personal assets are protected through a limited liability entity, there is not similar protection for the business. This is where Commercial General Liability insurance comes in because it protects the business. After all, no one wants their hard work whipped out.

But, does a business really need insurance?

Well, if a business owner wants to keep their business, then, yes. Commercial General Liability insurance covers businesses against most types of lawsuits. These include personal injury, bodily injury and property damage that was caused by the business’s negligence. This does not have to be the business owner’s negligence, it would also, generally, cover employees as well. This means if the owner or employee messes up, the business is covered for any business litigation that ensues.

Is insurance mandated by law?

Generally, no, though, it may be required, depending on the business, financial arraignments and loans, etc. However, just because it is not legally required does not mean that it is still not a good idea. After all, no business has to set up a limited liability entity, but it is a good idea to avoid personal liability.

Help?

This discussion of Commercial General Liability insurance may be the first time some of our Bloomfield Hills, Michigan, readers have even thought of business insurance. And, one never knows what they do not know, until they are told. This old adage is why it is always recommended to speak with an attorney.