Your family might need to know what is a LLC and what is LLC insurance?
Last week you were having dinner with your sister and her pompous husband. Her husband is the guy that was fired from his job at Sears Roebucks for offering life-time guarantees on holiday candles. He recently started a new business cleaning rain gutters under the business name Superior Debris Removers, LLC. “Where there is no will, we have a way!” He had business information printed on what looked like old leaves, which he paid the boy scouts to place on everyone’s front door step.
Unfortunately he did this in October and no one noticed the extra leaf at their door. However he was quite proud of his company along with the name and slogan he had created.
Your sister idolizes her husband and compliments him on the name, still she has one question. She knows what “Debris Removers” means, but what does “LLC” mean?
“LLC,” he said, “stands for Limited Liability Company! LLC is legal way of separating personal liability from a business operation. Because we own this new business we need to protect the home we inherited from your family from some sort of business liability claim. For instance, last week when I was cleaning the gutters at Pastor Bob’s house and I accidently knocked down those power lines, the church supper was shut down because the Bingo Blower wouldn’t work. Now because my business is set up as an LLC, their business loss lawsuit would be limited to the company’s assets and not our house, which isn’t part of the business.
“In fact, the total assets owned by ‘Superior Debris Removers, LLC’ are two pairs of rubber gloves, a step ladder, and a bucket.”
I had to admit it, outside of a quibbling few legal restrictions and a lot of case law, he had the LLC concept down. The only thing he hadn’t done was to purchase an LLC insurance policy designed to protect the LLC from a loss against his company. Granted his business may not have a lot of assets, but that would not limit the amount of money in legal defense an extended lawsuit by frustrated bingo daubers could entail.
While legally the LLC designation will separate and protect personal assets, her husband would still own the business and lawsuits from business accidents could haunt him for years. As Mitt Romney said, “Corporations are people, my friend!” and as long as the entity is clearly defined and supported it will have a lot to say in your stead.
A properly designed LLC insurance program can (depending on state law and policy definition) protect your brother-in-law and your darling sister from a variety of risks, including fire, property loss, workers compensation issues, and more. Your local insurance agent can help you find policies that fit the bill.
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