Do you need an LLC if you already have insurance?
Do You Need an LLC?
The short answer: YES
The longer answer:
Insurance is vital for any business, but ideally, it's only one piece of the puzzle.
Your LLC, your contracts, and your insurance all work together to create a layered risk-management strategy that makes a lawsuit less likely and less expensive and protects your money.
Here's how it all works together:
Your client contract defines the relationship and expectations between you and a client so that a lawsuit is less likely.
But a contract doesn't prevent a lawsuit. If the client sues you, you'd still have to pay a lawyer to defend you.
That's where insurance comes in - to pay for the costs of defending the lawsuit.
Your contract may provide evidence that supports you and helps you win the lawsuit, but you'd have to pay for a lawyer to get you there.
If you ultimately lose the lawsuit, even with the best lawyers your insurance can buy, insurance would cover the judgment (the payment the court decides you have to make to compensate the person suing).
If insurance doesn't cover the whole judgment (you reach your max coverage), an LLC would ensure the remainder doesn't come from your personal assets and can only be taken from what you have in your LLC accounts.
These three tools—insurance, a contract, and an LLC—work together to minimize risk and cost if something goes wrong.
To make sure your business risks are properly covered, contact Amy at ArtFul Contracts. She went to Law School, so you don't have to.
If you have questions about delegating or other ways to improve your organization, Contact
Stevan Browning, a business advisor and coach with over 40 years of experience.
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