Insurance

Insurance is very important in asset protection. Many asset protection strategies rely on insurance. Even though, you have many asset protection strategies in place, the chances are insurance can still add even more asset protection to your existing asset protection plan. On the other hand if your whole asset protection plan consists entirely of insurance policies, you may need to look into other asset protection strategies.

Insurance is many among many asset protection strategies but should not stand alone as an asset protection strategy

Sort types of lawsuits are better protected by insurance policies and some are better protected by other asset protection strategies. For example, if your corporation is undercapitalized, your insurance policy will come in handy to help you out of lawsuits.

Risk if you do not have insurance as asset protection strategy

If you do not have insurance and someone sues your corporation or a limited liability company (LLC) and that person is injured, the court may decide to award that person judgements. You would lose the court case especially if your business is engaged in activities that are dangerous and hazardous to the public.

What insurance usually does not cover

Insurance usually will not cover breach of contract claims but courts are less likely to charge a corporation for these types of debts. Claims such as sexual harassment, employment discrimination, wrongful termination, and fraud are almost never covered by insurance.

Duty of insurance company to defend the insured

Another benefit of having insurance policies as asset protection strategies is that duty of an insurance company to defend which is much broader than the duty of the insurance company to indemnify. The duty to defend includes paying for your legal defense. Duty to indemnify includes paying for a judgement against  you. Legal fees are killers even if you win in court. The court rarely awards the defending party legal fees and the plaintiff's lawyer is often working on a a contingent fee basis (unless you appear dead broke of course).