Durham, NC · Member since 2017 · 74 posts · 15 votes
There’s a lot of debate about setting up an LLC or just getting a big enough umbrella policy. I’m curious if anyone who has just an umbrella policy has been successfully sued where the umbrella policy wouldn’t cover the judgement. I know umbrella policies don’t cover fraud, for example, but any other real-world examples?
Lawyer/Investor · Atlanta, GA · Member since 2017 · 33 posts · 34 votes
8y
This isn't legal advice, and I don't have a real-world example, but some coverage issues to pay attention to might include injuries to common law employees, injuries involving liquor, and punitive damages for gross negligence.
Keep in mind that umbrella insurance policies are negotiated contracts like any other insurance policy. The language of these contracts varies and will lead to different results.
Insurance also won't protect you from being sued in your own name, making your personal transactions subject to civil discovery, damaging your credit score in the event of a judgement, etc., etc.
It may help to think about the insurance policy as your "umbrella" and the LLC as "rain boots." In a storm, you probably want both.