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  1. #1
    Join Date
    Aug 2014

    Question What Insurance Type Will Cover when the "Corporate Veil" is Pierced

    My question involves insurance law for the state of: CT

    Hi Everyone,

    I run a small business under a registered LLC in CT. I have been recently looking into purchasing both or one: Small Business Insurance and or Personal Liability Insurance. My concern is having to do with piercing the corporate veil. Bottom line: I want to make sure my personal assets are protected as much as possible. Since my business is online and does not have many assets I am not too concerned about losing those (just the personal ones). So my question is:

    Lets say that someone sues my company and somehow they are able to pierce the corporate veil and come after my personal assets. If I had one of these insurance types which one would cover my personal assets? I assume its the personal liability insurance but was thinking it might be the business insurance... Any thoughts? Thanks for the help!

  2. #2
    Join Date
    Jul 2007

    Default Re: What Insurance Type Will Cover when the "Corporate Veil" is Pierced

    Depends on policy terms. If you can buy a personal umbrella policy for, say $2 million of coverage, that does not disclaim coverage for operation of a business then you should be covered since the business has no assets to protect. Your home owner's and/or auto insurance company will offer umbrella liability coverage, but just make sure it doesn't exclude the actual thing you're concerned about, namely operation of a business entity.

  3. #3
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: What Insurance Type Will Cover when the "Corporate Veil" is Pierced

    You can discuss with your insurance agent what coverage you might be able to obtain that would shield you from personal liability, in the event that you were held personally liable for actions you took as a member of the LLC or that were taken by somebody else within the LLC but for which the courts held that you were nonetheless personally liable. An umbrella policy would provide some coverage, but whether it would be sufficient or provide coverage under the facts of this theoretical future claim will depend entirely on those as-yet-unknown facts. The LLC can explore what coverage might be available for its officers under various types of policy, and whether it would be cost-effective to purchase that insurance.

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