You run a fitness studio that trains individual clients and small groups. Because you are the only trainer, you run the business as a sole proprietorship. A client was injured and sues you for $1,000,000. You have no liability insurance on the business. What is your personal liability if you lose the lawsuit?
A) $0
B) $50,000, because that is how much money you have in the business account
C) $500,000, because that is how much your landlord paid for the building you are in
D) $1,000,000

Question

Quizplus · Accepted Answer

As a sole proprietor, there is no legal separation between the business and the owner's personal assets. Therefore, if the business is sued and loses, the owner is personally liable for the damages. In this case, the client is suing for $1,000,000 and since there is no liability insurance on the business, the owner's personal liability would also be $1,000,000.

You Run a Fitness Studio That Trains Individual Clients and Small