Limited liability insurance is a way to protect the investors of a company from much of the financial obligations that the company can incur.
In particular, the partners in a company with limited liability insurance are only financially responsible for the initial amount of investment.
This helps insulate the investor, by not forcing them to pay company debts out of their own personal holdings.
With this fact in mind, many people are attracted to these lowered risks.
There are many kinds of limited liability insurance that a company can purchase.
The most common form is insurance to cover negligence.
Many people today have brought negligence lawsuits against major corporations due to negligence.
This has resulted in awards sometimes ranging in the millions of dollars.
This can obviously bankrupt the owners of a company.
With this type of insurance, the insurance company will pay off the claim amount, with no worries to the partners of the company.
A good example of this is moving company.
If an employee of the company accidentally breaks something in the course of moving a client, the limited liability insurance will cover the cost of the replacement or repair.
Another type of limited liability insurance is called professional liability insurance.
This insurance is used by companies that provide services.
This type of insurance covers the company in the event of misfortunes caused by omissions, errors, even negligence.
Doctors carry this type of insurance to cover themselves in the event of malpractice suits.
It is a good idea to use this liability insurance in the technological field, to ensure coverage of damages caused through no fault.
Consider the computer technician that installs a program on a computer that somehow destroys the data already on the system.
This type of coverage will cover mishaps similar to this.
Product limited liability insurance is a type of policy that covers companies that supply products to the consumer.
If a customer becomes injured while using a company's product, they can bring suit against the company.
This will ensure that the customer is taken care of while allowing the company to stay in business.
A good example of this would be a company that sells wood stoves.
These stoves can obviously cause injury, since they are designed to give off heat.
The consumer takes it upon themselves to buy it, knowing the risks involved.
If the consumer then gets hurt while using the stove, they might be able to bring suit against the business.
Sales should rightfully continue, so the insurance company will help cover the cost of the suit.
If a company has limited liability insurance, it can be a good way to stay in business while providing a way to cover the costs of potential lawsuits against the company.
It is a way to buffer the investors of the company from the possible financial burdens that a lawsuit would bring.
When deciding to apply for a limited liability insurance policy, it is always best to consult with an attorney to ensure the best possible coverage is gotten.
The important factor to consider is what type of policy will be the best to protect all parties involved.