What does limited liability mean?
A type of liability that does not exceed the initial amount a person invested into a partnership.
Limited liability refers to the terms of limited partnerships, which comprise at least one general partner, who takes on unlimited liability, and one or more limited partners, who would never lose more than their original initial investment in fulfilling the partnership's obligations. Limited liability protects a partner's personal assets from being liquidated should the company become insolvent.
Additionally, limited liability can refer to an investment that has limited downside risk, such as a long position in a stock, with which the investor can lose no more than his or her initial investment.