If I’m setting up a personal training company, should I set up an LLC or is personal liability insurance sufficient to protect my assets?

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If I’m setting up a personal training company, should I set up an LLC or is personal liability insurance sufficient to protect my assets?

I am a certified personal trainer and am planning on providing on-line training services. I want to protect my personal assets. Is personal liability insurance sufficient to do so? Should I establish an LLC? If I set up an LLC, should I also obtain personal liability insurance? If I should obtain the liability insurance, how should I set this insurance up? Should the primary insured be the LLC, myself (who will be the owner) with the LLC as as additional insured on my policy, or does it matter?

Asked on April 26, 2011 under Business Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Do both:

1) Set up an LLC, or limited liablity company. That way, many cause of action (such as for breach of contract, debts owed, injuries caused by your employees, if any, etc.) can only be brought against the LLC, and not you personally.

2) Get insurance. There are some causes of action that could be asserted against you as well as the LLC. For example, say you personally are training someone and injure them somehow; you could personally be sued, as the person causing the harm, and your business could be sued, too. (LLCs do not protect one from liability for harm one personally did; they protect from business-related harm or obligations.) Insurance will provide an extra layer of protection.

3) As for who to insure--best bet is to discuss the matter with a reputable insurance broker, explain the situation, and follow his or her recommendations. You could--and should--get at least two different opinions.


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