Is Your Business Personally Liable? The Hidden Risks of Not Having Commercial Insurance

Starting or running a business is exciting—but it also comes with risk. And one of the biggest mistakes new business owners make? Assuming that forming an LLC or having personal insurance is enough to protect them if something goes wrong.

As a commercial insurance agent, I talk with Texas business owners every day who don’t realize how exposed they really are—until it’s too late.

If your business doesn’t carry the right commercial insurance, you could be personally liable for lawsuits, property damage, employee injuries, and more. That means your personal savings, home, and future could be on the line.

Let’s break down what that means—and how you can protect yourself.

The Myth of “I’m Covered Because I’m an LLC”

Forming an LLC or corporation is smart—it can shield you from some liabilities. But here’s what many business owners overlook: courts can still “pierce the corporate veil” if you don’t follow best practices, or if you’re operating without insurance.

Also, an LLC doesn’t cover:

• Client lawsuits for negligence
• Property damage or theft
• Employee injuries
• Auto accidents in a business vehicle
• Cyberattacks or data breaches

Without commercial insurance, those claims could be your responsibility—personally.

Real Risks You Might Be Overlooking

If you’re self-employed, starting a new business, or operating a small company, here are some common risks that commercial insurance protects against:

1. Customer Lawsuits

Even a small mistake—like accidentally damaging a client’s property or missing a key deadline—can result in a lawsuit. General liability and professional liability insurance protect against claims of negligence, bodily injury, or property damage.

2. Property Loss

What if your office, shop, or tools are damaged in a fire, flood, or storm? Commercial property insurance helps you recover fast without draining your savings.

3. Business Vehicle Accidents

If you use your vehicle for business—even occasionally—your personal auto policy likely won’t cover accidents. A commercial auto policy ensures you’re protected and compliant.

4. Employee Injuries

If you have workers, Texas doesn’t mandate workers’ compensation in most cases—but you’re still financially responsible for medical costs and lost wages if they’re injured on the job. One injury could bankrupt a small business without coverage.

5. Cyberattacks & Data Breaches

Even small businesses are targets. Cyber liability insurance helps cover legal fees, data recovery, customer notification costs, and more.

What Happens If You’re Not Covered?

Imagine this: a subcontractor trips on your job site and breaks a leg. They sue your company for $50,000 in medical costs and lost income.

If you don’t have general liability insurance, and the court rules in their favor, you’ll be paying out of pocket. And if your business doesn’t have the cash? They can go after your personal assets.

These aren’t scare tactics—they’re real scenarios we see all the time. Business insurance exists to keep your personal life separate from your business risk.

How to Protect Your Business (and Yourself)

Here’s how you can secure your business and your future:

Start with General Liability Insurance
Covers accidents, third-party injuries, and property damage.

Add Professional Liability (E&O) If You Provide Services
Great for consultants, real estate professionals, marketing firms, and more.

Don’t Forget Commercial Auto & Property Coverage
Especially if you rely on tools, gear, or travel for your business.

Consider Workers’ Comp and Cyber Insurance
Even if not legally required, these cover crucial gaps that could otherwise wipe you out.

Protect Your Passion, Not Just Your Paperwork

Starting a business takes courage, creativity, and grit. Don’t let one accident or claim undo all your hard work. Protect yourself, your business, and your personal assets with the right commercial insurance.

At McKnight Insurance Services, we specialize in helping business owners in Fort Worth and across Texas get tailored, affordable coverage that grows with their operations. Whether you’re just starting out or scaling up, we’ve got your back.