If my husband was at fault for a car accident but was excluded on the insurance, if we get sued and we lose can the injured parties go after our business?

UPDATED: Sep 20, 2014

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If my husband was at fault for a car accident but was excluded on the insurance, if we get sued and we lose can the injured parties go after our business?

There were 5 people in the other car; 3 are claiming insuries (although all of them were fine at the scene, laughing, walking around, no one complaining of injuries). They have already retained legal representation. Since our insurance will not cover their injury claims, we are concerned they could sue and come after our business. If we form an LLC or S-corp (currently our business is a sole proprietorship), will the business be safe from the lawsuit and possible judgment?

Asked on September 20, 2014 under Personal Injury, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

IF you'd already had the  business structured as an LLC or corporation, the business itself would almost certainly be safe, though possibly a lien could be put against you ownership interest in the business, and/or your income from the busienss garnished. However, forming an LLC or corporation now, after you have knowledge of a likely lawsuit, will most likely be seen as a transfer or transaction made to defraud creditors and will not be honored. Given the low cost of incorporating or establishing an LLC, you should probably try anyway--it's almost always a better idea to run your business through an LLC or corporation in any event--but don't be surprised if it doesn't insulate the business from this accident.

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