When you buy liability insurance, the coverage pays other people for harm you might cause. But what happens if you don't care if those people are protected? You still probably need liability insurance. Here's why.

You Don't Want to Get Sued

The most obvious reason for buying liability insurance is that you don't want to get sued. Even though your insurance company will pay the other person, it's really paying them so you don't have to. Liability insurance only applies to things other people can sue you for.

If you don't have liability insurance, the other person can just sue you directly instead of taking the claim to your insurance company. If you lose the case, you will need to pay the judgment out of your own pocket.

What If You Have an LLC?

If you have an LLC, you might think you don't need to worry about getting sued. This is only partially true. An LLC does give you some amount of personal liability protection for lawsuits and debts related to your business.

However, a lawsuit could wipe out your entire LLC. Without insurance, you'd need to use your business cash or sell business assets to pay any amount that your business owes. If you're not able to cover the debt, you may not be able to just close down your LLC and start a new one, as the court might consider it to be the same company.

In addition, an LLC might not stop a personal lawsuit against you. If the lawsuit was over your personal actions rather than an employee's, the plaintiff might be able to name you personally instead of just the LLC.

What If You're Judgment Proof?

You may think that you don't have to worry about a lawsuit if you don't have any money. This is also partially true, but it's not something that you want to rely on. Even if you don't have money now, the plaintiff may be able to garnish your wages or keep a judgment against money you receive in the future.

The court may also require you to sell assets like your car or your home. The limits on what you can keep are very low and are not sustainable for most people. If you don't carry liability insurance, you could easily be forced to live in poverty.

To learn more about general liability insurance, contact a local liability insurance company today.