Limited Liability Company Vs E&O?

[shooter]

I have been reviewing my E&O policy.
It seems like there are more holes in it than swiss cheese.
The list of things it doesn't cover seems longer than the things
that it will cover.

Would there be advantages to setting up as an LLC.
as for as my personal liability goes?
I understand we all need E&O, and I will renew mine.

But I would hate to get dragged into court over some
critical illness claim that a company denied.

Thoughts?
Well besides don't sell Critical Illness,lol.

Shooter

 

[SportsNut]

Would there be advantages to setting up as an LLC as for as my personal liability goes?
I understand we all need E&O, and I will renew mine.

But I would hate to get dragged into court over some
critical illness claim that a company denied.

Shooter

E&O is your friend even though there are limitations to it's coverage. The main element of your E&O initially is that the company would provide legal representation (Atty) on their nickel. They will try to avoid you being named liable for damages in the event that the transgression turned out to be a covered wrong doing... and the E&O company would then have to pay. Of course if you are deemed not covered after legal rep has been expended I believe that they can back-bill you for the legal expense... not certain on this one though... and at this point it is immaterial for this conversation.

As to the LLC... it is useless for liability protection to a sole practioner of any hands on business such as an ins agent. The reason being is IF lets say you omit something in a transaction for your client... YOU as the agent personally comitted the offense and can be held liable personally... and if the Agency is formed as an LLC or Corp or other entity IT can also be named as well... So the entity for an agency almost works in reverse for a small practitioner since the agent personally and the business entity will both be named in any legal action, most likely. The only benefit to an LLC is for an agent is for taxation purposes if you deemed the LLC to be taxed as an S-Corp... hence potentially savings on self-employment taxes of possibly 7-10K annually.

LLC's in theory can be an effective way to protect it's members from liability of debts of the LLC, such as a mtg or other loans. However the normal practice even here is for the lender to require the members of an LLC to personally guarantee the debt... LLC's are best for owning property which may shield the members from liability if a tenant or other person were injured on the property. The theory is that the injured party could recoup whatever the LLC owns, in theory the equity in the LLC owned property... and if it is mtg'd then that is nil.

Sorry for the lengthy LLC lesson... but it won't accomplish what you wish it would; IMO.