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Limited liability essentially puts a wall up between your business and personal assets. For instance, if your business owes money to a creditor, that entity can't pursue your personal assets to pay off debt ? they can only go after business assets.
Personal liability for business debts and obligations can arise where a business loses a lawsuit or incurs a debt obligation and the creditor then goes after the personal assets and property of the business owners or members.
Under your basic homeowners insurance or renters insurance policy, personal liability coverage may protect you under the following circumstances, up to your policy limits: Lawsuits you may face if an accident occurs. Bodily injury to an individual. Property damage that occurs as a result of your negligence.
Limited Liability Protection As previously noted, similar to the shareholders in a corporation, LLC members can't be held personally liable for the business debts. This means that all personal assets of the owner(s), i.e. home, car, personal bank accounts, personal investments, etc., cannot be touched.