Limited Liability Insurance for Limited Liability Company (LLC)

Limited Liability Insurance for Limited Liability Company (LLC)

 

Life is full of uncertainties. As an owner of a business, it is in your best interest to protect your personal assets in case your business is taken to the mat with a liability insurance claim or lawsuit in the worst case scenario. There are many issues that your business may encounter in the business world, whether you own a small business or big corporation, you might want to protect your personal assets in case your business goes under.

What is LLC?

Limited liability is a way to ensure that a person who is engaging in business does not put his personal assets at risk in case the business fails. The best way to explain LLC is “you risk only what you invest”.

LLC combines the benefits of both corporation and partnership; it is a relatively new type of business entity which first started in Wyoming in 1977. Anyone who has interest in an LLC is known as “member” rather than “shareholder”. The liability that the members of LLC are exposed to is only limited to their investment in the LLC. This implies that any partner, investor or members of LLC cannot be held personally liable for company debts or any unfulfilled company obligations by law except they have stood a personal guaranty.

 

Limited Liability Exceptions

LLC serves as a barrier between your business and personal assets, however, there are things you do while performing your work which LLC cannot protect you from such as:

  • You fail to manage your business taxes properly
  • You injure someone as result of your own mistake
  • You personally guarantee a business debt or loan
  • You engage in a crime or fraud or reckless behavior that has devastating effect on your company
  • You mix your personal and business accounts together.

 

How Do You Form An LLC?

In United States, LLC is formed by applying and filling the “Articles of Organization” with the relevant secretary of state. The “Articles of Organization” is very simple, brief and it only provides the basic information required with respect to the name of the company, the address of the company, the manager(s), the service provided by the company and the members of the LLC.

LLC is structured a bit like partnership. It can be manager-managed or members-managed. If it is manager-managed, the manager handles all of the day-to-day business operations while the members only decide on major financial and business decisions. In the other hand, if it is members-managed, all members will have an equal vote and decide between themselves on financial policies and major business operations.

 

Pros and Cons

There has been much talk about the benefits of making your business as a limited liability company (LLC). It is important that you understand the advantages and disadvantages involve before venturing in this type of business structure.

The Advantages

More Flexibility: You will enjoy more flexibility of being taxed as partnership, sole proprietor, S corporation or C Corporation.

Cost Effective: There is less paperwork and cost of filing involve in this type of business structure.

Investors: You can form an LLC with just one person; you can as well form it with unlimited number of members.

Limited Liability: The members of LLC are protected from most of the liability if the company runs into debt or legal issues.

Perpetual Existence: An LLC, just like a corporation has a life of its own. This implies that it can continue to exist even when the owners die or sell-off their shares.

Less Compliance Issues: Unlike corporations, an LLC in most states doesn’t require board of directors or annual meetings.

 

The Disadvantages

Restrictions: The members of an LLC are restricted from paying oneself.

Raising Capitals: Investors prefer putting their money into a corporation, so it can get hard for an LLC to raise financial capital

Additional Taxes: In states such as New York, Texas, California and others, LLCs are required to pay a franchise tax or “capital values tax”.

 

The Main Differences Between A Sole Proprietor & A Limited Liability Company

There are many legal ways to structure your new business such as S Corporations, Limited Liability, Sole proprietorship or partnership. Understanding these business structures, the cost involved and their financial implications will help you make informed decisions when starting your business.

Here are the major differences between sole proprietor and limited liability Company;

Sole proprietorship is a business that is own and run by one person, the business is unincorporated and ceases to be a sole proprietorship when the owner decides to create an LLC.

  • Ease and Costs of Formation

Sole proprietorship is the most popular type of business entity in the United States. When compared to an LLC, the Sole proprietorship is easy to form. Moreover, it is less complex, less expensive and requires few paperwork to get it up and running.

LLC is more difficult to start compared to sole proprietorship. You need to register with appropriate state agencies; you must draft and also file “articles of organization”. Before starting an LLC, you need to pay a filing fee which can run into hundreds of dollars in some states.

  • Number of Partners

Sole proprietor like the name sounds, is made up of only one individual, an LLC can have unlimited number of members.

  • Raising Capital for Your Start-Up

A sole proprietor needs to source for capital to start the business on his own. He may use his personal assets as collateral to receive loan. He can as well borrow from friends and families and risks his personal assets when his business fails.

An LLC has many members who can pool their resources together and also reach out to a wider network of potential business contacts to get the capital to start the business. Besides, the members’ assets are not affected when the business fails.

 

 

  • Taxation of Your Business

A sole proprietor’s income is normally taxed based on an individual income tax return. An LLC can choose to be taxed as Sole proprietorship, partnership or S corporation.

  • Your Role in Daily Business Management

You are your own boss when your business is structured as sole proprietorship. You make the important financial and business decisions.

For LLC, all members participate when it comes to taking important financial and business decisions. Members have to decide how a business is run. They can run it together or appoint a manager to take care of day-to-day running of the business.

  • Risks of Personal Liability

You and your business are seen as one and the same under the sole proprietorship. This implies that you have unlimited liability for every debts and legal liabilities of your sole proprietorship. You risk your personal assets under this business model.

You can lose only what you invest in LLC. When the business fails, your personal assets remain intact. You are not liable for the company’s debt or unfulfilled obligations.

 

How much is Limited Liability Insurance?

If you are just opening your business, you are probably wondering how much it will cost you to get limited liability insurance. You need to cover range of risks and potential incidents such as equipment damage, accidents, injuries, theft and liability claims.

What you should know is that your business insurance rates are unique to your company and what your company do. This explains the reason why there are no average business liability insurance costs for both large and small businesses.

  • A sole proprietor might pay $500 annually for general liability insurance while a small firm might be ask to pay more than $3000 per year for the same insurance.
  • A sole proprietor who designs clothes in his home office faces limited liability concerns but a landscaper due to an increased risk may pay upward of $15000 in general business liability insurance per year.

Normally the cost for liability insurance will vary depending on the specific risks of your business.

 

Conclusion

Getting the right coverage from the right company is very important. It can protect you from various concerns starting from damage to your property to the risk of cyber crime. Ensure you have adequate coverage to give you peace of mind so that you can serve your customers better. Find a trusted insurance company today and get limited liability insurance at an affordable rate.

Types of personal injury & Time limitation

Types of personal injury & Time limitation

Personal injury accidents are a typical instance of lawsuits in numerous areas. The specific term implies an incident or accident in which psychological or bodily harm has happened, instead of physical damage to the property. Personal injury lawsuit often claims that the injury was prompted, if not purposefully, in any event through carelessness or negligence of the perpetrator.

Traffic Accidents

The most common type of personal injury involves a car or vehicle accident. These might incorporate accidents caused by road instability or debris in the road, car crashes, as well as vehicle pedestrian collisions. These are civil trials (not criminal trials), where the loss is usually limited to financial compensation. Is an individual has caused an accident due to DUI, evading police, or purposely involving in recklessness, she or he might face a criminal trial and a personal injury suit on account of civil damages.

Workplace Accidents or Accidents at Work

The workplace or office is a typical place of personal injury damages. These could occur in different ways from being injured due to machine malfunction to suffering electric shocks because of poor wiring. This particular type of personal injury might also incorporate the acquisition of commercial or production diseases such as being clinically diagnosed with emphysema or asbestosis after serious exposure to these components at work with no protection.

Slip and Fall Personal Injury or House Tripping Accidents

Slip & fall personal injury happen when an individual injures him or herself on another individual’s property. This might be at a friend’s place, on public property, or at a business. If the injured person or party to confirm or verify that the damage would not have happened without irresponsible actions on the owner’s part, that injured person can sue for damages. If second party or owners believes he is not irresponsible, a counter argument might suggest that the injured person managed to slip or fall due to his or her own negligent behavior despite proper safety provisions, and existing conditions are not the cause of the accident.

Medical Malpractice

Medical malpractice is also considered a type of personal injury. This happens when a dentist, doctor, or physicians does not perform his or her work as per appropriate medical standards, as well as show negligence or violation of duty. For instance, prescribing a banned drug or wrong drug to a patient.

Time Limitation of Personal Injury Insurance

Personal damage accidents are common and happen each and every day, as well as, are regularly basic accidents. All personal injuries must occur within a time limit (usually 3 years from the date of the accident); however, this time limit or statute of limitation varies regionally. The time limit of 3 years taken into consideration when a person is above 18 years old, which implies that if a person (read kid) is 15 years old, he or she have a 6 year limitation of claim.

The Pros and Cons of Gun Liability Insurance

The Pros and Cons of Gun Liability Insurance

There’s nothing that can ensure the safety of gun ownership. Even in the hands of wise and responsible people, there will be the high risk of serious injuries and death to others. In a case involving liabilities, gun owners may pay compensation for the losses of victim’s families. Well, the system works similarly to car insurance liabilities. People can learn the similar approach with it. The fact is that the constitution won’t give people run away from their responsibilities once they put someone’s life at risk. Insurance companies are good at calculating the risks posed by gun owners. However, there are pros and cons regarding gun liability insurance bill. 

The Pros : Why Should Gun Owners Take Gun Liability Insurance? 

Basically, many experts estimate the violence caused by owning guns. The problem isn’t either the people or the guns. It’s the responsibility of owning firearms. Japanese don’t have the right to use guns. Citizen lives happily with this law. People in Switzerland have the right to use a gun. Still, the number of crime is zero. The condition will be different among Americans. These people need to be disciplined. One of the best methods is to increase their responsibilities such as taking homeowners insurance concealed carry. That means they need to recoup the losses by paying compensation to victim’s families. This prevents the reckless use of firearms.

Gun owners should know how dangerous their firearms are. We can compare it to the car insurance. Buying a car isn’t right if it’s mishandled. Not to mention there are will be some incident occurs. That’s why car insurance is compulsory. Having a gun includes potentials risks and dangers. A gun, in fact, is a dangerous device that can lead to lots of liabilities such as deaths and injuries. Gun liability insurance isn’t mean to eradicate accidents. It ensures that the victim’s families are covered financially. Due to this reason, all gun owners should apply for gun liability insurance cost. Otherwise, they don’t know how to learn the responsibility of possessing firearms.

Well, homeowners’ insurance gun liability is a compulsory thing for gun owners. People have realized how harmful guns can be. Without a responsibility, guns may cause lots of liabilities. Something can go wrong among people who carry a gun. Those who own a gun should protect others and themselves from potential accidents. With the insurance, they will be more careful when shooting or operating a firearm. These days, insurances are quite mandatory among citizen. Gun liability insurance is as important as other types of insurances like a car, health insurance, etc. Everything that could potentially cause liabilities to others, whether on accident or purpose, should be covered by insurance.

The Cons: The Drawbacks of Gun Liability Insurance

Some people refuse to buy nra gun liability insurance. That’s because they have been fed up with many types of insurance. They don’t want to get more, actually. That means they won’t support anyone who brings up that agenda. They also think that most of the gun owners have been aware of the risks. Therefore, the risk is quite low for these people to cause liabilities. If they buy the gun liability insurance, the insurance companies would take lots of profits. It’s because those law abiding citizens don’t even cause harms to others. They don’t even have the chance of being liable, actually.

Bad people and gang members won’t buy such kind of insurance. This is a fact. These people cause more harms than good people. So why should responsible gun owners buy concealed carry liability insurance? This means the insurance companies only take money from good guys, who likely wouldn’t cause harms to others. There’s no coverage among gang members or bad people with an unlicensed or stolen gun. These thugs own more potential threats than responsible gun owners. The worst thing is that they may never apply for gun liability insurance. It’s common sense. Killers or robbers will be considered fools if they take such insurance.

Responsible gun owners can’t reduce the crime rates by buying gun liability insurance. They can’t prevent criminals from doing crimes out there. The case is similar to car insurance. Do auto insurance holders can eliminate the chance for accidents out there? Many careless drivers remain big in numbers. These people don’t even take car insurance. Given this fact, many people aren’t into gun liability insurance. The society needs to be more responsible instead of giving money to the insurance companies. In some cases, having self-defense liability insurance won’t affect anything.

That type of insurance only favors the rich. That means the poor gets discriminated from it. The government only focuses on dealing with problems that haven’t even existed. People consider the legislation or second amendment provides a solution that seems useless. The debate occurs when there is a gun control conducted by the government. Asking the gun owners to apply for gun liability insurance isn’t effective. The fact is that bad people remain high in numbers. Not to mention there will be always gun-related crimes out there. The insurance does nothing to reduce the crime rates. It only covers the victim’s families financially.

Summary

To sum up, it’s true that firearms possess potential risks and harms. The owners have the responsibilities to use their guns. They can’t be careless and misuse those things. Accidents do happen, actually. What can they don when they incidentally hurt others with their gun? The worst case is that they may take other people’s life. Gun liability insurance can protect the victim’s families with compensation. This type of insurance is considered important, after all. It can make gun owners more responsible and careful with their firearms. Many people like this policy while the others consider it as useless.

Many gun owners oppose the idea of having gun liability insurance. They have already been responsible with their guns. They don’t want to spend money on something that they won’t do. Plus, they consider it as an inefficient strategy to control gun-related crimes. Killers, robbers, and gang members will remain undetected. These thugs won’t buy such kind of insurance. That’s why the crime rates will remain high with or without the gun range insurance. It isn’t the gun or the people. It’s the purpose or intention of using the firearm that matters.

 

Liability Insurance Requirements

Liability Insurance Coverage can provide protection if you are at fault for causing an accident and damages to another person’s body or property. Most of the product and public liability risks are covered often together under a policy for general liability insurance.

In the United States, the general liability insurance coverage appears most often in commercial general liability policies which are purchased by businesses, as well as in homeowners’ insurance policies which are purchased by individual homeowners. Aside from providing protection against damages, business liability insurance can cover claims of misleading or false advertising such as copyright infringement, slander, and libel. In addition to the protection offered to homeowners, general liability insurance can be purchased by renters who want to safeguard themselves against any liability if damage is caused by fire or any other incident.

There is also liability car insurance available to help pay for accidents that you might cause and it is usually required by law in most states. In New York State, you are required to get auto liability insurance coverage to register a vehicle.

Here are some of the auto insurance requirements that you have to satisfy:

Liability coverage has to be effect whilst you have a valid registration, even for vehicle not in use;

Liability coverage must be from a New York State insurance company;

Liability must always stay in the name of whoever registers the vehicle.

 

General Liability Insurance Requirements

You are required to have select limits for liability insurance. As with most insurance plans, a general liability policy is going to outline the highest amount that the insurance provider will pay against any liability claim. For instance, if you have a maximum coverage of $200,000 and someone sues your small business to get $150,000 for the amount spent on medical bills after an injury occurred at the worksite and $100,000 extra for legal fees, then you will be responsible for covering the difference.

Bear in mind that you could increase your limits if you already have a general liability insurance policy and you’re ranked as an extremely high risk candidate. This can be done through umbrella or excess insurance.

 

Other Important Information

It is possible to get a release of liability to save money and time, as well as avoid hassles. This could work if you have sold a vehicle recently and the title is transferred to the new owner. This release will prevent you from paying for any traffic collisions or violations that is committed before the vehicle registration is removed from your name.

Ensure that you research your industry before investing in any policy. There are times when a client contract requires businesses to have the appropriate coverage or even umbrella insurance to work on their behalf. Similarly, someone might want a contractors insurance to have an additional name on their general liability policy for the length of a project.

Limitation Of Liability

What Is Limited Liability?

Are business issues ever truly divisible from legal issues? Many sales people itching to get a contract signed have suggested that my job as the lawyer is merely to advise a company on the “legal issues” in an agreement. Put another way, they want me to see no evil in the provisions they have deemed “business issues” and restrict my review to isolated “legal matters”. This is difficult because business and legal issues are often intertwined (and I am not a girl who can just close my eyes and pretend not to see glaring issues).

For instance, a limitation of liability clause, sometimes a contentious issue in a contract, can be classified as both a business and a legal issue. A limitation of liability clause sets out the maximum financial responsibility a party will incur if a breach of contract occurs. Properly drafted, and where enforceable, it provides protection and is useful for evaluating project risk. Typically, neither party is liable beyond the contract price, and neither should bear responsibility for damages not directly related to the breach. Of course, there are some items that should be excluded from the limitation of liability. Indemnification, or protection from third party claims, is typically excepted out of a limitation of liability clause, and often breaches of representations and warranties are, too.

Because a limitation of liability clause involves dollar figures, some business people view it purely as a business issue, a deal point to be negotiated and mentioned in the contract. Surely, the ultimate decision as to how much liability to bear is a business risk to be determined by the responsible party. However, the effect of the clause, and particularly its relationship to an indemnification or warranty section, needs to be viewed in the context of the entire contract and seen in light of both the business and the legal consequences of the language.

Commercial General Liability – Who is an insured?

  1. Named Insureds
  2. Individual including the spouse. As an individual you are covered for the conduct of any business of which you are the sole owner.
  3. Partnership or Joint Venture. Includes partners, members and their spouses. Coverage is limited to the conduct of your business.
  4. Limited Liability Company. Includes members and managers. Coverage for members is limited to the conduct of their business and coverage for managers is limited in respect to their duties only.
  5. Includes executive officers, directors and stockholders. For Executive officers and directors, coverage is limited to their duties. For stockholders, coverage is limited to their liability as stockholders only.
  6. Includes trustees. Coverage is limited to their duties as trustees only.
  7. Others
  8. Employees and volunteer workers, other than executive officers of corporation and managers of Limited Liability Company. Coverage is limited to acts within the scope of their employment or while performing duties related to the conduct of your business.
  9. Persons other than employees and volunteer workers. Coverage is limited to while acting as your real estate manager.
  10. Any person with temporary custody of your property if you die. Coverage is limited to liability arising out of maintenance or use of that property.
  11. Your legal representative if you die. Coverage is limited in respect to their

 

duties.

No рerson or organization is an insured with respect to the сonduсt of anу current or рast рartnershiр, joint venture or limited liability сomрanу not shown as a Named Insured in the Declarations of the policy.

Note that emрloуees, volunteer workers, рersons other than emрloуees are defined in your рoliсу language and should be reviewed with уour agent.

 

How to Get Business Liability Insurance?

Risk is always present when business activities are undertaken. As a business owner and manager, your job is to reduce this risk to the lowest possible minimum. One of the most effective ways for doing this is the purchase of business insurance. The coverage which you buy must have several important qualities. One of them is comprehensiveness. The more comprehensive your protection is the lower the risk for your company is.

Commercial Asset Protection

In order for business insurance to be comprehensive, it must provide protection to all of your commercial assets including buildings, equipment, materials and ready-made products. It is essential for your assets to be covered against as many perils as possible. The list includes fire, theft, vandalism and natural disasters. Just make sure that the perils are clearly defined in the policy agreement and there is no confusion.

It is best if you cover your cash flow as well. This is done through the purchase of a business interruption cover. It is designed to help you maintain your cash flow in case your company is hit by a peril and cannot operate due to this. In this situation, the insurer will pay all of your fixed costs such as rent and lease instalments. They will also assist you financially with restoring your operations. If this is not possible, they will provide compensation for your loss. This type of cover can literally salvage your company so it is highly recommended for business of all sizes and in all industries.

Liability Protection

It is mandatory for every company to be covered for liability under its business insurance policy. You must obtain either product liability cover or professional liability cover depending on whether you sell physical products or services. The cover will protect you in case a client makes a claim for compensation for property damage of bodily injury against your company.

You will also need public liability cover. It is designed to protect you in case members of the public, who may or may not be your clients, make a claim against you for property damage or bodily injury. For example, if a visitor to your office slips accidentally and suffers an injury, he can make a claim for compensation. If the court rules in his favour, then the policy will cover the compensation amount.

Finally, in order for your business insurance policy to be truly comprehensive, you will need commercial auto cover for all of your business vehicles. The auto insurance covers the liability of the drivers and protects the vehicles against perils.

How to Get Liability Car Insurance?

Getting a Auto Liability Car Insurance Policy can be easier than you think. You must look for a policy that fits your needs such as how much do you use you car? There are many Car Insurance Policies that are available to you and you should decide what type of coverage you need. Some factors to consider could be the age of your car, it is important to remember that you can get a Liability policy that will just cover you in an accident but some people are looking for more coverage in case there car is stolen or something happens to it.

It is always best when looking for auto insurance to shop around and get several quotes. There are many companies that will allow you to get the quotes through them to many insurance companies. It is important that you do not get lured in by fancy advertisement when choosing a Auto Liability Car Insurance Policy because there very well might be a policy that is lower than a nationally advertised one.

Try to get a higher deductible because this can also lower the amount of your insurance premium. Remember that you should always shop for insurance when buying a new car as well because the premiums will vary a lot depending on what type of car you choose. A sports car for instance will have a much higher premium than a standard sedan.

Other Coverage You May Want

Collision and comprehensive coverage – Liability coverage does not cover the cost of repairing or replacing your car when have an accident, so you may want to purchase collision and comprehensive coverage.

Collision coverage pays to repair or replace your car when you’re involved in an accident. Comprehensive coverage pays to repair or replace your car when your car is stolen, or when it’s damaged by vandalism, fire, or acts of nature.

PIP (personal injury protection) – This coverage pays for your and your passenger’s medical expenses when you’re involved in an accident. It also pays for your and your family’s medical expenses when you’re hit by a car while walking.

Uninsured motorist coverage – This pays for expenses related to your injuries caused by an uninsured driver, an under-insured driver, or a hit-and-run driver.

Cheap Auto Liability Insurance Quotes

The best way to get cheap liability auto insurance is to go to an insurance comparison website where you can get rate quotes from a number of different companies.

There are also some safer driver discounts that you may qualify for so make sure that you ask about them when getting a policy.

Things You Need to Know About Liability Claim

A liability claim occurs when you cause damages or injuries to a third person. Every state in the United States requires you to carry insurance. The insurance that is required by law is liability. Liability coverage is the “bear bones” coverage. If you carry an insurance policy, then you have coverage for a liability claim.

For instance, auto liability coverage will only cover someone else’s vehicle; you will have to pay for damages to your own car. If the accident was not your fault, then you have to make an auto liability claim against the person that hit you. If that person does not have insurance, then you will have to fix your own car and try to collect against that person directly. This is the reason why you need to Uninsured/Under Insured Motorist Damage.

Liability coverage is a fault base coverage. This means that for this coverage to be triggered, the driver carries the insurance liability coverage must be at fault at least partially. Here is where insurance adjuster will take their time investigating who was at fault and how much. There are cases where fault is clear (rear end accidents). However, there are other accidents where there is a clear dispute of facts (red – green light dispute). The claim adjuster must determine who is at fault. If you are in a situation where you are being accused even for 1% fault, then you want to have your own insurance carrier protect you from the auto liability claim the other insurance company will make against you.

Clear fault liability claims are not much of an issue. If you were at fault, then your insurance company will pay for all damages and injuries to either the responsible party or her insurance company. Equally, if you were not at fault, then her insurance company will pay your damages directly. You insurance company will not pay you anything since you did not have first party coverage (Collision).

A dispute auto liability claim can become quite cumbersome. If there is split fault, then your insurance company and the other carrier must “sit down” and argue liability and damages. The adjusters will attempt to reach an agreement as to the percentages of fault of each driver. If they agree, then they would pay each other the amount of their corresponding damages. If you did not carry collision, then you have to call the carrier of the other person and ask for at least that percentage of your damages. They will pay you directly. If you do carry collision, then the insurance companies will exchange payments and then your company will send you your deductible back (if your company had already paid your damages and/or medical bills).

If the adjusters cannot agree about who is at fault, then insurance companies will go to arbitration. An impartial arbitrator will review both adjusters’ files and then make a binding decision. Arbitration decisions are final and insurance companies must follow them. Insurance companies cannot appeal arbitration decisions.

You are still bound by your policy liability limits. The damages that you caused must be below those limits for the insurance company to protect you 100%. The insurance company is required by law if they believe there is a risk that the damages will exceed your limits.