Definition - What does Limited Liability mean?
Limited liability is a form of liability that protects specific people or entities, limiting the number of assets that can legally be taken away from them if they are found guilty of a crime. Limited liability also refers to instances wherein a person can only be held liable to the extent of their investment in a company.
Justipedia explains Limited Liability
A basic example of a company that has limited liability is a limited liability company (LLC). Owners and executive officers often apply for their company to become an LLC in order to protect themselves. If an individual runs a company that is not an LLC, then they risk being hurt as a result of the company, since a plaintiff can go after both the company's assets and the company owner's assets. However, if the company owner makes the company an LLC, only the company will be liable for any damages.