Legal Question in Personal Injury in Maryland
Limited Liability Company Protection
My husband and I are thinking of starting a LLC to sell woodworking products over the Internet. We are favoring the LLC because of the liability protection it affords us. I understand that the liability protection will protect our personal assets from creditors of the LLC. However, does this liability protection extend to lawsuits that may be brought against us from a customer? Our concern is that, despite our best effort at doing what we can to prevent an accident, a customer may injure himself or herself using a product we sell. We don't want to lose our personal assets if that should happen.
2 Answers from Attorneys
Re: Limited Liability Company Protection
If you properly establish and operate your company, a corporate or LLC form will generally protect you from personal liability. However, it is not a sure thing, as failure to follow proper formalities, your own personal negligence or misconduct, or other problems could result in piercing the corporate veil. While an LLC or corporation should be used for the protection it provides, you should also make sure you have appropriate insurance coverage, including products liability coverage.
Re: Limited Liability Company Protection
The formation of an LLC is but one aspect of protecting yourself. The LLC
must be properly run in order to continue this protection. Moreover, appropriate measures should
be taken to ensure that the LLC and you are protected (for example, properly developed disclosures, product liability insurance, review of the
particular product and assessment of risks inherent with the type of product, etc.). Form does NOT dictate over substance. Your actions to protect the LLC go along way toward protecting yourselves.
It is more than mere form that provides the protection, there must be substance to support the form.
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