LLC Liability Protections For Its Members Clarified

Creation of an LLC is oftentimes a first step in the formation of a startup business. It is often mistakenly believed that the LLC will provide liability protections to shield individual members from personal liability for third party claims arising in the course of the business of the LLC. That is not always the case. More particularly, members who are engaged in the activities of the business of the LLC and who personally cause damage to another person or entity during the course of the LLC business have individual liability for the third parties injuries or other damages in addition to the potential liability of the LLC. LLC liability protections do not extend to a member of the LLC who, while in the course of the business of the LLC, causes a vehicle accident, steals money from a customer, engages in a scheme to defraud investors or the public, or otherwise commits a wrongful act or omission that harms a third party. Liability insurance that covers the LLC, its members, and employees is available to provide  coverage for claims brought against the LLC, its members, and employees, for negligent acts or omissions during the course of the LLC business. Liability insurance generally does not provide  coverage for members and employees of the LLC who commit fraud or other intentional wrongful acts or omissions during the course of the business of the LLC. Having a knowledgeable experienced attorney and insurance agent is essential for any business. Please contact Rumsey & Ramsey, a Dunwoody, Georgia law firm, at (770) 394-9400 to discuss your questions concerning this topic.